AMD Reports a Loss on 26% Revenue Decline

Advanced Micro Devices Inc.’s third quarter results suffered from weak sales of chips for personal computers, but it disclosed a deal with a Chinese company that will provide a $371 million cash infusion and reduce future costs. The chip maker on Thursday reported a $197 million loss in its third quarter on revenue that fell 26% from the year-earlier period. AMD recorded a $65 million write-down of some older chips in addition to a previously announced restructuring charge.

AMD said revenue in its computing and graphics segment rose 12% from the second period but was off 46% from the year-earlier quarter.

Reporting the reason for the decline as, PC makers hadn’t built as many systems using Microsoft Corp.’s new Windows 10 operating system as AMD had expected. AMD’s quarterly loss, which came to 25 cents a share, compares to a profit in the year-earlier of $17 million, or 2 cents a share. Revenue declined to $1.06 billion from $1.43 billion.
Last month, AMD moved to lay off about 500 workers and outsource services as part of a broader realignment. Excluding $48 million in restructuring charges from that move and other items, AMD said its loss was 17 cents a share.

For the current quarter, AMD said it expects revenue to decrease 10% from the third quarter compared with analyst estimates of an about 6% drop.

AMD’s shares fell less than 1% in late trading to $1.96 following the announcement.

Under the deal disclosed on Thursday, Nantong Fujitsu Microelectronics will acquire an 85% stake in those operations and AMD will retain the remainder. About 1,700 AMD employees, roughly 18% of its workforce, will be transferred to the new joint venture.

AMD also said the deal will significantly cut its capital expenses. Ms. Su said the company plans to take other actions to bolster its balance sheet, including possibly licensing some of its patents.

“This portfolio is not broadly licensed and could provide a significant source of revenue for years to come,” she said.