Earnings Preview: Advanced Micro Devices

Advanced Micro Devices (AMD) is expected to report Q3 earnings after the bell Thursday afternoon Oct. 16,  with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is loss (40c) for EPS and $1.48B for revenue, according to First Call.

Analyst Views

Analysts will likely focus much attention on AMD's bold move to spin off its manufacturing facilities into a new company, which it said should give the cash-strapped chip maker a much-needed boost. But amid mounting economic uncertainties, analysts see AMD continuing to face stiffer competition from Intel (INTC) even as it struggles, along with the rest of the chip industry, with weakening demand.

Wedbush expects AMD to report Q3 revenue and EPS results of $1.46B (+8.4% QoQ) and a loss of (39c), slightly below consensus. Wedbush's checks show that AMD's CPU product portfolio did not materially change and as a result did not gain CPU market share during the quarter. However, AMD's RV770 graphics product family has done extremely well against competitor NVIDIA (NVDA) and should benefit top-line growth, as graphics were 18% of sales in Q2, says Wedbush. The firm is modeling Q4 revenues and EPS estimates of $1.57B (+7.4%) and a loss of (30c) versus consensus of $1.60bn (+7.7%) / $(0.25).

Management maintains its plans to achieve operating profitability in the second half of this year and, given Wedbush's expectations of moderating demand in Q4, they think AMD will likely fall short of this optimistic target.

Thomas Weisel's analyst said he expects AMD to report "a rather muted" Q4 outlook "given the macroeconomics and the AMD's product weaknesses in notebooks and netbooks." Still, Weisel noted that the company "may be at an inflection point based on a new product and process cycle to stage a slow turnaround in its business model."

Most analysts expect few details on the earnings call as management will provide additional details including updated financial targets at its Analyst Day in Sunnyvale on November 13.