Advanced Micro Devices (AMD) forecast first-quarter revenue below analysts’ estimates, due to lower demand for its graphic chips used in consoles and an economic slowdown in China.
Shares of the company, which is in the process of selling some of its assets to cut costs, fell about 6% to $1.83 in extended trading.
AMD has been shifting to gaming consoles and low-power servers, but progress has lagged Wall Street expectations due to intense competition from Intel and Nvidia. The company said a cautious macro environment in China would affect revenue in the first quarter.
AMD’s revenue is expected to be lower in the first half of 2016 compared to the second half, based on the seasonality of the PC and game console businesses, chief executive Lisa Su said on a conference call.
The company forecast revenue for its first quarter to decrease 14 per cent, plus or minus 3 per cent, from the preceding quarter. This represents revenue of $799.2-$848.6 million, below analysts’ average estimate of $898.5 million, according to Thomson Reuters.
AMD said it expected 2016 revenue to grow year-over-year, as it gears up to ship its Polaris graphic processing units in the middle of the year. The company also said it expected to return to non-GAAP operating profitability in the second half of the year.
The net loss narrowed to $102 million, or 13 cents per share, in the fourth quarter ended December 26, from $364 million, or 47 cents per share, a year earlier.
Excluding items, the company lost 10 cents per share, in line with the average analysts’ estimate. Revenue fell 22.7 per cent to $958 million but still came above analysts’ expectation of $954.7 million. Up to Tuesday’s close, AMD’s shares had fallen 13 per cent in the past 12 months.