AMD rebounds in 4Q, but outlook disappoints Street

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SAN FRANCISCO (AP) — Advanced Micro Devices Inc. swung back to a profit during the fourth quarter as the holiday-season debuts of the latest PlayStation and Xbox video-game consoles helped the chip maker overcome an ongoing slump in personal computer sales.

The results released Tuesday were upstaged by a management forecast that left open the possibility of AMD's first-quarter revenue falling below the analyst projections that guide Wall Street. That prospect appeared to rattle investors as AMD's stock shed 41 cents, or nearly 10 percent, to $3.76 in extended trading.

AMD earned $89 million, or 12 cents per share, during the three months ended Dec. 28. That contrasted with a loss of $473 million, or 63 cents per share, a year earlier.

The Sunnyvale, Calif., company benefited from a $48 million gain that flowed in from a legal settlement in a patent dispute.

If not for that one-time lift, AMD said it would have earned 6 cents per share. That figure was penny better than the average estimate among analysts surveyed by FactSet.

Revenue for the period climbed 38 percent from the previous year to $1.59 billion — $50 million above analysts' predictions.

Like other chip makers, AMD has been hurt by a downturn in PC sales as more people buy smartphones and tablets instead. The company's division that makes PC chips suffered an operating loss of $7 million in the fourth quarter as its revenue declined 13 percent.

But the operating profit in AMD's graphics chip division soared by nearly six-fold to $121 million, thanks largely to the November releases of Sony Corp.'s PlayStation 4 and Microsoft Corp.'s Xbox One. Both consoles use AMD chips.

Sales of the new consoles are expected to taper off now that the holidays are over. AMD expects its first-quarter revenue to decrease 13 percent to 19 percent from the fourth quarter. That would translate into revenue ranging from $1.29 billion to $1.38 billion for the opening quarter of the year. Analysts had been calling for first-quarter revenue of $1.36 billion.

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