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AMD to Sell Some Testing Operations, Gives Weak Revenue Forecast

AMD to Sell Some Testing Operations, Gives Weak Revenue Forecast

By Reuters | Updated: 16 October 2015 10:02 IST

Advanced Micro Devices Inc said on Thursday it would sell most of its assembly and testing operations in two Asian cities, as the struggling chipmaker looks to cut spending amid weak demand for its processors for personal computer.

AMD said it will sell 85 percent of its ATMP (assembly, test, mark and pack) operations in Suzhou, China and Penang, Malaysia to China's Nantong Fujitsu Microelectronics Co Ltd (NFME) for a net proceeds of $320 million (roughly Rs. 2,078 crores).

The company also said it would create a joint venture with NFME as part of the deal, to which it will contribute 1,700 employees. It said it did not plan to cut any jobs.

AMD earlier this month said it would cut 5 percent of its global workforce. It had 9,700 employees globally, according to its annual report in February.

AMD, which makes central processing units and graphics chips, said it expects the transaction to be "cost neutral" and significantly reduce its capital expenditures.

The company also reported its fifth straight fall in quarterly revenue and forecast current-quarter revenue that fell short of analysts' average expectations.

"Overall, PC demand, particularly in the consumer market, continues to be somewhat muted," Chief Executive Lisa Su said on a call with analysts.

PC shipments fell 7.7 percent worldwide in the third quarter as the rising dollar made them costlier, research firm Gartner said last week.

AMD posted a net loss of $197 million (roughly Rs. 1,279 crores) in the third quarter ended September 26 compared with net income of $17 million (roughly Rs. 110 crores) a year earlier. It lost 17 cents per share on an adjusted basis.

Sunnyvale, California-based AMD's revenue fell 25.8 percent to $1.06 billion (roughly Rs. 6,885 crores).

Analysts on average had expected a loss of 12 cents per share and revenue of $995.9 million (roughly Rs. 6,469 crores), according to Thomson Reuters I/B/E/S.

AMD forecast current-quarter revenue to fall 10 percent, give or take 3 percent, sequentially. The midpoint of the range translates to about $955 million (roughly Rs. 6,203 crores), well short of analysts' estimate of $996.3 million (roughly Rs. 6,471 crores).

The company's shares were volatile in trading after market and were last down 0.5 percent at $1.96.

The stock had fallen about 26 percent this year through Thursday, steeper than the 5 percent fall in the broader Philadelphia SE Semiconductor index.

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