AMD beats estimates sans CEO

SAN JOSE, Calif. - Advanced Micro Devices Inc. beat Wall Street's estimates despite lower shipments for microprocessors and graphics chips.  

AMD announced revenue for the first quarter of 2011 of $1.61 billion and net income of $510 million, or $0.68 per share. The company reported non-GAAP net income of $56 million, or $0.08 per share.

One firm, Raymond James, was looking for $0.63 a share on sales of $1.61 billion. Both Thomson Reuters and FirstCall consensus EPS estimates are based on non-GAAP models and are $0.05 and $0.06 a share, respectively. AMD was expected to have revenue of $1.61 billion, according to Reuters.

The non-GAAP number primary excludes the previously communicated non-cash gain based on the change in book value of its investment in Globalfoundries Inc., which amounted to some $492 million.  

Overall, it was a mixed quarter for the company. AMD's revenue fell 2 percent sequentially  but jumped 2 percent year-over-year. In the previous quarter, AMD had sales of $1.65 billion and net income of $375 million, or $0.50 per share. In the like period a year ago, AMD announced revenue of $1.57 billion and net income of $257 million, or $0.35 per share.

AMD's processor segment revenue decreased 2 percent sequentially but increased 3 percent year-over-year. ''The sequential decrease was driven primarily by lower average selling price (ASP) partially offset by higher desktop microprocessor sales,'' according to AMD. ''The year-over-year increase was primarily driven by strong microprocessor unit sales in the channel.''

The company's graphics segment revenue decreased 3 percent sequentially and was flat year-over-year.  The sequential decrease was driven primarily by a seasonal decline in royalties received in connection with the sale of game console systems.

“First quarter operating results were highlighted by strong demand for our first generation of AMD Fusion Accelerated Processing Units (APUs),” said Thomas Seifert, CFO and interim CEO, in a statement.  “APU unit shipments greatly exceeded our expectations, and we are excited to build on that momentum now that we are shipping our ‘Llano’ APU.”

AMD expects revenue to be flat to slightly down sequentially for the second quarter of 2011.

''We expect AMD to deliver a modest 1Q11 sales upside to the sequentially flat-to-down-slightly guide as we believe AMD also benefited from emerging market dynamics per Intel’s commentary earlier in the week,'' said Hans Mosesmann, an analyst with Raymond James, in a report prior to the actual results.

Wall Street analysts acknowledged the obvious Wednesday (April 20)—that their estimates for Intel's first quarter sales and earnings were too conservative—a day after Intel reported first quarter financials that handily exceeded analyst expectations and the company's own targets.

Intel Tuesday reported first quarter sales of $12.8 billion, up 12 percent sequentially and up 25 percent year-to-year. The world's No. 1 chip vendor reported GAAP net income of $3.3 billion, or 56 cents per share, flat with the previous quarter and up 2.9 percent from the year ago quarter.

''We suspect AMD saw ASP declines in both CPUs and GPUs, and we believe the company will not replicate Intel’s server/data center momentum or Intel’s Sandy Bridge ramp despite AMD’s good ramp with its netbook-centric Brazos platform,'' he said. ''We believe a seasonal to below seasonal guide is in order in terms of 2Q11 with the wild card coming from the timing of the upcoming Llano platform. Llano should finally give Intel’s Sandy Bridge some competition in 2H11, particularly in consumer segments of the PC market.''

Here's the biggest worry: AMD has yet to name a new CEO. ''Without strategic direction, it’s difficult to overcome an increasing likely 2011 in which the company is set to lose both CPU and GPU market share. There is no formalized tablet/smartphone strategy at AMD and to the degree tablet cannibalization of lower-end notebooks and netbooks plays out going forward, it is AMD that is most vulnerable given its more consumer-centric exposure,'' he said.

''On paper, we do believe AMD has all of the critical elements and technologies to be successful; however, it will take time and a visionary CEO,'' he added.

Earlier this year, Dirk Meyer, president and CEO of AMD, resigned from the company after two years as its top executive. Seifert, AMD's chief financial officer and senior vice president, was been appointed interim CEO of AMD, the company said.