Advanced Micro Devices Inc. shares rallied in the extended session Tuesday after the chip maker’s full-year outlook held out some promise, while its revenue and first-quarter outlook missed Wall Street estimates and earnings were in-line.
rallied 9% after hours and held steady during a call with analysts, following a 4.6% decline to close the regular session at $19.25. In comparison, the S&P 500
closed down 0.2%, the tech-heavy Nasdaq Composite Index
closed down 0.8%, and the PHLX Semiconductor Index
finished down 1.5%.
For 2019, AMD said it expects “high single-digit percentage revenue growth driven by Ryzen, Epyc and Radeon data-center GPU product sales as the company ramps 7nm products throughout the year.” Analysts forecast 2019 revenue of $6.89 billion, or 6.3% higher than AMD’s reported 2018 revenue of $6.48 billion.
For the first quarter, AMD expects revenue of $1.2 billion to $1.3 billion, a sequential decline of about 12% and about 24% less than a year ago. Analysts had forecast revenue of $1.65 billion.
“When we look at Q1, particularly on a year-on-year basis, there are a lot of moving pieces,” said Lisa Su, AMD’s chief executive, on the analysts call. “But it’s primarily due to the graphics channel, and that’s both the reduced amend as well as the absence in blockchain revenue on a year-over-year basis as well as the semi-custom business.”
“But as we move forward, as we go into Q2 and beyond, we see a significant opportunity with the ramp of our new products, and that’s how we see the year,” Su said.
In a statement, AMD said first-quarter weakness would be “primarily driven by continued softness in the graphics channel and seasonality across the business” on a sequential basis and “driven by lower graphics sales due to excess channel inventory, the absence of blockchain-related GPU revenue and lower memory sales” on a year-over-year basis.
“So, relative to the full-year guidance of up high single digits, the primary growth drivers are Ryzen and Epyc . . . with data center GPU also, we are expecting that to be up,” Su said. Ryzen is AMD’s PC-chip line, while Epyc is its server line of chips.
The company reported fourth-quarter net income of $38 million, or 4 cents a share, compared with a loss of $19 million, or 2 cents a share, in the year-ago period. Adjusted earnings were 8 cents a share. Of the 29 analysts surveyed by FactSet, AMD on average was expected to post adjusted earnings of 8 cents a share. Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, called for earnings of 10 cents a share.
Revenue rose to $1.42 billion from $1.34 billion in the year-ago quarter. Wall Street expected revenue of $1.44 billion from AMD, according to 28 analysts polled by FactSet. Estimize expected revenue of $1.46 billion, and AMD had estimated revenue of $1.4 billion to $1.5 billion.
Computing and graphics sales rose to $986 million from $908 million in the year-ago period. Analysts surveyed by FactSet had expected computing and graphics sales of $939 million.
Enterprise, embedded and semi-custom sales rose to $433 million from $432 million in the year-ago period, while analysts had forecast $493.7 million.
Investor expectations may have been for the worse following a revenue warning from rival Nvidia Corp.
on Monday. Nvidia cut its revenue outlook for the recent holiday quarter by $500 million because of weakness in China and a poor initial adoption of its new line of gaming cards.
Of the 36 analysts who cover AMD, 15 have buy or overweight ratings, 15 have hold ratings and six have sell or underweight ratings, with an average price target of $22.47.
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