AMD Swings To Q3 Loss, Creates JV With China's NFME

(RTTNews) - Advanced Micro Devices Inc. (AMD) Thursday posted a loss for the third quarter, as revenues continued to plunge due to weakness in the PC industry.

Sunnyvale, California-based AMD's third-quarter loss of $197 million or $0.25 per share, compared to earnings of $17 million or $0.02 per share last year.

Adjusted loss for the quarter was $0.17 per share compared to adjusted earnings of $0.05 per share last year.

AMD's revenues for the quarter plunged 26 percent to $1.06 billion from $1.43 billion last year.

The company said its revenues dropped largely due to lower sales of client and graphics processor products and ongoing weak PC demand. Computing and graphics segment revenues dropped 46 percent, while enterprise, embedded and semi-custom segment revenues dropped 2 percent year-over-year.

Worldwide PC shipments dropped 7.7 percent to 73.7 million units in the third quarter, according to research firm Gartner Inc. (IT). Desktop PCs continued to show weakness with a high-single-digit decline.

AMD, known for its processors for personal computers, have been negatively impacted by the slowing demand for PCs and notebooks as tablets and smartphones gained prominence. The company is also losing market share to its larger rival Intel Corp. (INTC) and competition from Nvidia Corp. (NVDA). Meanwhile, the company has diversified its portfolio and currently also makes chips for video game consoles.

Early this month, AMD announced a restructuring plan to reduce workforce by about 5 percent.

Gross margin dropped sharply to 23 percent from 35 percent a year ago.

Looking forward to the fourth quarter, the company expects revenues to decrease 10 percent, plus or minus 3 percent, sequentially.

AMD also agreed to create a joint venture with Nantong Fujitsu Microelectronics valued at about $436 million. The deal is expected to close in the first half of 2016. Nantong Fujitsu Microelectronics would take a 85 percent stake in AMD's operations in Penang, Malaysia, and Suzhou, China. In exchange, AMD will get for $371 million in cash and a 15 percent stake in the new entity.

AMD closed Thursday's trading at $1.97, up $0.02 or 1.03%, on the NYSE. The stock further gained $0.02 or 1.02% in the after-hours trade.