Why Advanced Micro Devices, Inc. (AMD) Earnings Are Stuck in the Red

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AMDAdvanced Micro Devices, Inc. (NYSE:AMD) will release its quarterly report on Thursday, and unfortunately, investors expect the company to say that it lost money again during the second quarter. With so many problems facing the company both in the PC and mobile industries, it’ll take a pretty big turnaround to get AMD earnings moving in the right direction again.

In light of those challenges, the biggest surprise for AMD is the huge run-up in its share price so far this year. Investors are clearly hopeful that the company’s recent victories in getting its chips into the latest-generation gaming consoles might help set the stage for a true recovery, but that doesn’t change the fact that at least for now, both revenue and net income have been falling precipitously. Let’s take an early look at what’s been happening with Advanced Micro Devices, Inc. (NYSE:AMD) over the past quarter and what we’re likely to see in its report.

Stats on Advanced Micro Devices

Analyst EPS Estimate ($0.13)
Year-Ago EPS $0.06
Revenue Estimate $1.11 billion
Change From Year-Ago Revenue (21.5%)
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Can AMD earnings catch up with its stock?
Analysts have started getting slightly more optimistic about the long-term prospects for Advanced Micro Devices, Inc. (NYSE:AMD) earnings, reducing their full-year 2013 loss estimates by almost $0.10 per share and reversing initial expectations for a $0.05-per-share 2014 loss to predict a similarly sized gain. The stock has been on fire, rising nearly 75% just since early April as investors who left the stock for dead have started to regain confidence in the company’s future.

For years, Advanced Micro Devices, Inc. (NYSE:AMD) has found itself stuck in the middle of a major paradigm shift in the chip industry. On one hand, the company was never able to dislodge Intel Corporation (NASDAQ:INTC) from its dominance in the PC chip business, with Intel currently commanding about a five-to-one advantage in market share over AMD. Meanwhile, on the mobile front, QUALCOMM, Inc. (NASDAQ:QCOM) has done a good job of using the mobile revolution to boost its share of the overall microprocessor market, as AMD fell to the No. 4 position behind Intel, Qualcomm, and Samsung. Without a strong position in either mobile or PCs, AMD has struggled to find a workable strategic vision for its future.

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