Advanced Micro Devices forecast stronger-than-expected revenue growth of 22 percent in the third quarter from the second, as the chip maker expands into new game consoles and other markets to offset slowing sales of personal computers.
However, the stock reversed earlier gains on Thursday after AMD said gross margins would fall as it seeks a foothold in game consoles.
AMD is the arch rival of Intel, both supplies processors to the PC market, be it desktop or notebooks. As PC sales are dwelling, AMD is refocusing it sales into new market such as tablets and smartphones.
Currently, AMD processors are being used in Microsoft Corp’s upcoming Xbox One and Sony Corp’s next-generation PlayStation game consoles. These are largely behind AMD’s upbeat revenue forecast.
AMD’s report comes after Intel warned on Wednesday that it does not expect revenue to grow in 2013 due to slowing PC industry.
AMD reported second-quarter revenue of $1.161 billion, down from $1.413 billion in the year-ago quarter. It said third-quarter revenue would rise 22 percent, plus or minus 3 percent, compared with the June quarter. That increase would be about $1.416 billion.
Analysts, on average, had expected revenue of $1.108 billion in the second quarter and $1.223 billion in the third quarter, according to Thomson Reuters I/B/E/S.
AMD posted a net loss of $74 million, or 10 cents a share, in the second quarter, compared with a profit of $37 million, or 5 cents a share, in the same quarter last year.
The company said its non-GAAP loss per share was 9 cents, better than the 12-cent loss expected by analysts.
AMD’s stock declined 3.66 percent in extended trade after closing up 5.94 percent at $4.64.