Advanced Micro Devices (AMD)
Advanced Micro Devices Incorporated reported that its first quarter revenue rose 34 percent to $1.57 billion. The computer chip manufacturer even managed to recover from a year earlier net loss of $416 million with a $257 million net gain this quarter. AMD has made some impressive strides to improve its quarterly performance, and is looking to ride this positive momentum into the next quarter. However, some investors are concerned with how well AMD is stacking up against its industry rivals. What is the cause behind AMD’s turnaround? How does its performance compare to other competitors?
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Stock Analysis
A big factor for AMD’s strong quarterly performance has been a rise in demand for personal computers. The PC market appears to be bouncing back from the collapse it suffered during the recession. However, AMD has also seen considerable success with its new DirectX 11 graphics card offering. Advanced Micro Devices is particularly pleased with its graphics card sales because it helps diversify its market opportunities. AMD typically relies heavily on its computer processor product line to generate profit, and was very pleased with the DirectX 11 graphic cards’ revenue contribution. In addition, AMD’s higher laptop and processor prices helped the company to capitalize on the resurgence in computer sales. AMD posted a “record” revenue for the first-quarter, but how did that compare to its archrival, Intel (INTC: Charts, News, Offers)?
Intel also had a strong quarter as it posted a net income of $2.4 billion. However, the real concern for AMD is that its market share appears to be falling against Intel. Naturally, Advanced Micro Devices’ net income will go up in accordance with the market demand, but it is not improving its market position. Another key distinction is that Intel did much better with its new products and average selling prices. Not only is Intel capturing more of the market, but it’s commanding a higher premium than AMD. That being said, AMD has some projects in the pipeline that it hopes will solve this problem.
Advanced Micro Devices is planning to implement a 32-nanometer manufacturing process that will improve its chips’ speed and power efficiency during the second half of the year. AMD is optimistic that this will provide the opportunity to steal some market share from rivals. In addition, the computer chip manufacturer has a new laptop chip that combines both the CPU and GPU on the same silicon piece that will be released sometime next year. AMD is also working hard to push its graphics cards lineup to consumers and build off its current momentum. The computer chip manufacturer seems to be very excited about these product advancements and is looking forward to their anticipated drop dates.
Overall, AMD seems to be happy with its quarter performance. Advanced Micro Devices realizes that its sales increase is mainly because of the market recovery. As a result, Intel is also benefiting from the same resurgence in demand. However, Intel has also had success entering untapped markets with various new products. Advanced Micro Devices recognizes that this is an area of its business that it needs to improve, and has tried hard to diversify its product lineup by releasing seven new graphics cards for desktops and laptops during the quarter. It also has a few new chip processor releases that are supposed to help it increase market share in the traditional PC industry. AMD is hoping that its new product offerings have enough “processing power” to surpass Intel in quarters to come.
Mores News about AMD
- AMD Shipped Over 6 Million DX11 GPUs – A closer look at how AMD is doing in the graphics card market. Click to read more.
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