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AMD profits fall 27 per cent due to lower demand

Graphics holds steady as CPU business feels the pain
Fri Jul 20 2012, 13:16
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CHIP DESIGNER AMD has reported steep declines in second quarter revenue and profit stemming from weaker demand for its products.

Last week AMD revised down its revenue forecast by almost 11 per cent, and yesterday the firm confirmed that forecast by reporting second quarter revenue of $1.41bn, a 10 per cent drop from the same period in 2011. AMD's revenue decline was relatively good news compared with the 27 per cent fall in profit to $77m reported by the firm.

AMD's graphics division generated operating income of $34m, which is an impressive share given how much publicity and channel effort it has put behind its accelerated processor units (APU). The firm classes its APU business, even though the chips contain graphics cores, as part of its processor business.

AMD president and CEO Rory Read reiterated that weakened demand for its processors in China and Europe was the reason for the company's lacklustre results.

He said, "We are taking definitive steps to improve our performance and correct the issues within our control as we expect headwinds will continue in the third quarter as the industry sets a new baseline. We remain optimistic about our core businesses as well as future opportunities with our competitively differentiated next-generation Accelerated Processor Units (APUs). Our recently launched Trinity APU continues to gain traction with customers. We are committed to driving profitable growth."

AMD's Trinity APUs are expected to see a bigger retail presence the third quarter as OEM vendors prepare low-cost machines for the lucrative back-to-school buying period. However AMD will need a minor miracle to overcome the $570m loss it posted in its first quarter if it wants to end the year in the black. µ


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