Shares of AMD (AMD) were up about 1% to $13.00 after hours on Thursday after the chipmaker beat earnings and sales estimates for the fourth quarter. After falling 3.4% during the day's trading, AMD shares alternated between rising and falling after hours.
AMD reported adjusted earnings of $0.08 per share vs. $0.05 per share expected on revenues of $1.48 billion vs $1.41 billion expected. Shares have risen more than 25% year to date, after a weak 2017 when its shares fell 9%.
- AMD is switching to a new accounting standard that, if used in 2017, would have resulted in Q4 sales being lower by $140 million, and below consensus estimates relying on the old accounting standard.
- At the same time, based on the new standard, AMD's Q1 revenue guidance is at $1.55 billion (+/- $50 million), which is well above a $1.25 billion consensus that relied on the old standard. Analysts might press the company on the earnings call to share more details about the impact of the accounting change.
- Based on the old accounting rules, Q4 revenue and EPS were above consensus. The upside was entirely driven by AMD's Computing & Graphics (PC CPU and GPU) segment, whose revenue rose 60% year-over-year to $958 million on the back of desktop CPU share gains against Intel (INTC) and solid GPU demand. The segment's sales were well above an $863 million consensus estimate. Both cryptocurrency miners and Apple (AAPL) design wins lifted GPU sales.
- AMD's Enterprise, Embedded & Semi-Custom segment saw revenue of $522 million, up 3% year-over-year, but below a $535 million consensus estimate. Lower-than-expected console processor sales appear to be the culprit.
- With the help of higher PC CPU and GPU average selling prices (ASPs), gross margin grew by 3 percentage points annually to 35%, and was in-line with guidance. AMD expects gross margins to tick higher to 36% in Q1.
- After years of cutting costs in response to declining sales, AMD is comfortable raising its spending again. Adjusted operating expenses grew 15% Y/Y to $412M.
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