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Chipmaker AMD’s Shares Tank 8% on Disappointing Sales

May 1, 2017, 9:15 PM UTC
AMD announcement in San Francisco, California, Wednesday, August 17, 2016.  (Photo by Paul Sakuma Photography)
AMD announcement in San Francisco, California, Wednesday, August 17, 2016. (Photo by Paul Sakuma Photography)
Paul Sakuma Photography

Chipmaker Advanced Micro Devices reported lower-than-expected quarterly revenue in its business that supplies server chips, sending its shares down 8.3% in after-market trading on Monday.

Revenue in AMD’s business, which manufactures chips for the server industry and also gaming consoles, rose 5% to $391 million. However, that missed analysts’ average estimate of $442.1 million, according to financial data and analytics firm FactSet.

The miss overshadowed robust performance in the company’s computing and graphics business, driven by demand for its latest Ryzen processors and its graphics chips.

AMD also forecast second-quarter revenue to rise about 12% year-over-year at the midpoint.

Analysts on average were expecting revenue to rise about 9% to $1.12 billion, according to Thomson Reuters I/B/E/S.

The Sunnyvale, California-based company’s new Ryzen processors, aimed at the personal computer market, have helped rekindle its rivalry with Intel, which has long dominated the industry.

AMD’s graphics processors, used in gaming consoles including Playstation 4 and Xbox One, have also gained a foothold in the low- to mid-range market for PC chips that are used to power video games. Rival Nvidia has long controlled the high-end of the market.

AMD’s net loss narrowed to $73 million, or 8 cents per share, in the first quarter ended April 1, from $109 million, or 14 cents per share, a year earlier.

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Revenue rose 18.3% to $984 million.

Excluding items, the company lost 4 cents per share.

The results were in-line with analysts’ estimates.

AMD’s shares (AMD), which joined the broader S&P 500 index in March, had risen more than 20% this year through Monday’s close, outperforming the 12% gain in the Philadelphia semiconductor index.

The stock had risen more than four-fold last year.