AMD Misses Earnings Target, Signs Joint Venture With Nantong Fujitsu For Final Assembly And Test Operations
An ongoing softness in the PC market continues to take its toll on Advanced Micro Devices (AMD), which reported a $197 million loss in the third quarter of 2015. That's the bad news. And the good? AMD managed to increase its revenue to $1.06 billion, up from $942 billion in the previous quarter, and inked a deal that will give the company an additional $371 million in cash.
AMD attributed the rise in revenue to "solid seasonal semi-custom and strong desktop processor and GPU sales." The semi-custom chips AMD refers to are those found inside a myriad of video game consoles. Overall, AMD's Computing and Graphics segment saw a 12 percent increase sequentially, but a steep 46 drop year-over-year.
The aforementioned $371 million in case is a nice band-aid that will more than offset the company's quarterly loss. It comes as part of a joint venture with China's Nantong Fujitsu Microelectronoics (NFME) in which AMD will provide its Penang and Suzhou assembly and test factories, including around 1,700 employees, in exchange for the cash payment. NFME will have an 85 percent stake in the joint venture when the deal is finalized.
"AMD delivered double-digit percentage sequential revenue growth in both of our segments in the third quarter," said Dr. Lisa Su, AMD president and CEO. "We continue to take targeted actions to improve long-term financial performance, build great products and simplify our business model. The formation of a joint venture of our back-end manufacturing assets is a significant step towards achieving these goals and strengthening our balance sheet."
Going forward, AMD said it expects to record a 10 percent decline in revenue in the fourth quarter, plus or minus 3 percent.
AMD attributed the rise in revenue to "solid seasonal semi-custom and strong desktop processor and GPU sales." The semi-custom chips AMD refers to are those found inside a myriad of video game consoles. Overall, AMD's Computing and Graphics segment saw a 12 percent increase sequentially, but a steep 46 drop year-over-year.
The aforementioned $371 million in case is a nice band-aid that will more than offset the company's quarterly loss. It comes as part of a joint venture with China's Nantong Fujitsu Microelectronoics (NFME) in which AMD will provide its Penang and Suzhou assembly and test factories, including around 1,700 employees, in exchange for the cash payment. NFME will have an 85 percent stake in the joint venture when the deal is finalized.
"AMD delivered double-digit percentage sequential revenue growth in both of our segments in the third quarter," said Dr. Lisa Su, AMD president and CEO. "We continue to take targeted actions to improve long-term financial performance, build great products and simplify our business model. The formation of a joint venture of our back-end manufacturing assets is a significant step towards achieving these goals and strengthening our balance sheet."
Going forward, AMD said it expects to record a 10 percent decline in revenue in the fourth quarter, plus or minus 3 percent.
