AMD’s Q1’16 Earnings Preview: Growth To Re-accelerate in 2H’16

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AMD (NYSE:AMD) is set to release its Q1 2016 earnings on April 21st. The year 2015 was a challenging one for AMD.  In addition to weak macroeconomic conditions and declining PC sales, the company was hit by significant market share loss to Intel (NASDAQ:INTC) in APUs (i.e., Accelerated Processing Units) and Nvidia (NASDAQ:NVDA) in GPUs (Graphics Processing Units). AMD’s 2015 revenue declined by 28%, while its net loss expanded to $660 million, compared to $403 million in 2014.

While Q1 2016 is a seasonally weak quarter, AMD targets revenue growth for fiscal 2016, driven primarily by:  1) regaining share in the client compute and discreet graphics markets, lifted by gaming, VR (virtual reality), and a competitive product roadmap;  2) growth in the datacenter and infrastructure markets, driven by AMD’s FirePro GPU’s and next-generation service CPU’s; and, 3) further expanding the TAM for products and technologies through ramping the previously communicated Semi-Custom wins, converting additional Semi-Custom pipeline opportunities, and gaining share in the targeted embedded market.

AMD plans to return the company to non-GAAP operating profitability in the second half of 2016 and generate positive free cash flow from operations for the year. It expects to see stronger revenue growth in the back half of the year, based on the seasonality of the PC and gaming console businesses.

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