AMD Is Adrift Amid the Tablet Revolution

by Tom Taulli | October 19, 2012 10:42 am

AMD1 AMD Is Adrift Amid the Tablet Revolution

As expected, Advanced Micro Devices (NYSE:AMD[1]) posted a dismal third-quarter earnings report[2]. Keep in mind that the company issued a warning[3] last week, which sent the shares to a 52-week low. Shares were trading some 10% lower on Friday, at $2.35, far outpacing a broad market selloff.

In the quarter, there was a loss of $157 million, or 21 cents a share, which was down from a profit of $97 million, or 13 cents a share in the same period a year ago. Revenues fell from $1.69 billion to $1.27 billion.

Unfortunately, it looks like the bad news is far from over. For Q4, AMD forecasts a drop in revenues of as much as 9%, to $1.1 billion. The Wall Street estimate was for fourth-quarter revenues of $1.31 billion.

As a result, AMD is taking tough actions. For example, the company is going to slash 15% of its workforce, about 12,000 employees. The move should reduce costs by about $190 million for 2013.

But the biggest hurdle is that AMD does not have a strategy to capitalize on the tablet revolution, which is dominated by Apple (NASDAQ:AAPL[4]), Google’s (NASDAQ:GOOG[5]) Android and even Amazon’s (NASDAQ:AMZN[6]) Kindle. In other words, the company’s deterioration could continue for quite a while.

Tom Taulli runs the InvestorPlace blog IPOPlaybook[7], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.[8]”  Follow him on Twitter at @ttaulli[9]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. AMD: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMD
  2. report: http://www.nytimes.com/2012/10/19/technology/advanced-micro-devices-posts-a-157-million-net-loss.html?partner=yahoofinance&_r=0
  3. issued a warning: http://investorplace.com/2012/10/amd-warns-on-revenue-cuts-forecast/
  4. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  5. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  6. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  7. IPOPlaybook: http://investorplace.com/ipo-playbook/
  8. How to Create the Next Facebook.: http://www.amazon.com/gp/product/1430246472/ref=s9_simh_gw_p14_d0_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=0GRB6ZMCTYDZVNG7Q7NV&pf_rd_t=101&pf_rd_p=470938811&pf_rd_i=507846
  9. @ttaulli: https://twitter.com/ttaulli

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