AMD said that it had a $65 million write-down of inventory for older-generation accelerated processing units (APUs), resulting in an impact of 8 cents a share charge.
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AMD, based in Sunnyvale, Calif., is the longtime underdog to Intel Corp.in sales of microprocessors that serve as calculating engines in PCs. In return, AMD will no longer have to support an operation that might be sitting idle when its chips aren’t selling well, and it gets something else a struggling company needs: cash to fund the development of future products.
The new joint venture will absorb AMD’s assembly, test, mark, and pack (ATMP) operations, including two production sites, one in Pengang, Malaysia and the other in Suzhou, China, along with about 1,700 employees.
“Overall, PC demand, particularly in the consumer market, continues to be somewhat muted”, Chief Executive Lisa Su said on a call with analysts. It said it did not plan to cut any jobs. Upon closure, AMD said that it expects the transaction to be “cost neutral” with significantly reduced AMD capital expenditures.
Ms. Su also said Hewlett-Packard Co. has used AMD processors for a new line of notebook computers aimed at corporate customers. Computing and graphics segment revenues dropped 46 percent, while enterprise, embedded and semi-custom segment revenues dropped 2 percent year-over-year. That helped force AMD’s earnings down more than tenfold from past year, swinging the company to a $197 million loss (-25 cents per share) from a $17 million profit (2 cents per share).
Besides PC chips, AMD has broadened its business into customized chips that Sony Corp. and Microsoft use in their latest videogame consoles.
Last month, AMD moved to lay off about 500 workers and outsource services as part of a broader realignment. A year ago, AMD reported a profit of $17 million on revenue of $1.43 billion, a drop of 26 percent in revenue.
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Analysts on average had expected a loss of 12 cents per share and revenue of $995.9 million, according to Thomson Reuters. The stock further gained $0.02 or 1.02% in the after-hours trade.
