Advanced Micro Devices, Inc. (NASDAQ:AMD) posted a surprise second-quarter profit after nearly two years. Even though the net profit reflected one-time gains, the chipmaker insists it is on course to report further sales growth in the current quarter.
Strategy Change
The Sunnyvale-based company is projecting an 18% increase in revenue for the third quarter as demand for its graphics products continues to grow. The optimism comes at a time when the company’s prospects have been battered by a shrinking PC market. Stiff competition from rival Intel on Microprocessor chips saw the company post four straight years of losses.
A change of strategy in the recent past has allowed Advanced Micro Devices to reinvigorate its prospects in the industry. The chip giant has reduced its reliance on chips for PCs having switched attention to chips for video games and other software.
The company is also introducing new products and moving into new markets where it does not directly compete with Intel Corporation (NASDAQ:INTC) as it continues to pursue new opportunities for growth. Aggressive spending which analysts raised concerns could lead to a collapse of the company is no longer an issue as well. The efforts are already paying off seen by the stock price nearly doubling in the market to four-year highs.
Second Quarter Earnings
Revenue in the quarter was up by 9% to $1.03 billion allowing the company to post a net income of $69 million or 8 cents a share compared to a loss of $181 million posted last year. Analysts were expecting a net loss of 10 cents a share.
Joint ventures are helping Advanced Micro Devices, Inc. (NASDAQ:AMD) make good use of its expansive line of patents and intellectual property. In the first quarter, it inked a server chip venture in China that contributed to a one-time revenue of $150 million. Chief executive officer, Lisa Su, says they are in the process negotiating a number of similar deals given the opportunity at hand.
