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SanDisk Q1 disappoints, Advanced Micro Devices tops views

Chipmakers SanDiskCorp (NASDAQ:SNDK) and Advanced Micro Devices (NYSE:AMD) reported first quarter results after the bell Thursday, with the former company disappointing the Street, while the latter beat analyst estimates.

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Chipmakers SanDiskCorp (NASDAQ:SNDK) and Advanced Micro Devices (NYSE: AMD) reported first quarter results after the bell Thursday, with the former company disappointing the Street, while the latter beat analyst estimates.

SanDisk said that for the three months that ended April 1, net income was $114 million, or 46 cents per diluted share, versus a profit of $224 million, or 92 cents per share, in the year ago period.

Adjusted profit was 63 cents per share, while analysts were looking for 70 cents per share, according to Thomson Reuters.

Revenue declined seven percent year-over-year to $1.21 billion, and fell a whopping 24 percent from the fourth quarter.

"Our first quarter results were adversely impacted by lower-than-expected pricing and demand weakness in certain segments and we expect similar trends in the second quarter as well," said Sanjay Mehrotra, president and chief executive officer.

"We believe a seasonally stronger demand environment in the second half of the year, combined with our diversifying portfolio of mobile and SSD solutions, will allow us to deliver strong sequential revenue growth in the third and fourth quarters."

Gross margins declined to 36 percent in the first quarter, and the company said it anticipates margins to fall further to between 26 to 30 percent in the current second quarter.

SanDisk also projected second-quarter revenue of $950 million to $1.05 billion, well below the Street's $1.30 billion estimate.

Meanwhile, despite the glut in the memory chips market, Advanced Micro Devices managed to beat estimates in the first quarter even though it swung to a loss on a $703 million accounting charge related to a revised supply agreement with its main manufacturer.

The company reported a net loss of $590 million, or an 80-cent-loss per share, compared to a profit of $510 million, or 68 cents, a year earlier.

But core earnings improved as adjusted profit, which excludes the accounting charge and other one-time costs, was 12 cents per share, above the nine cents expected by analysts.

Revenue fell two percent year-over-year to $1.59 billion, and was down six percent from the fourth quarter.  But analysts expected revenue of only $1.56 billion.

Gross margin was two percent in the latest quarter, with adjusted margins of 46 percent.

Its computing solutions unit saw flat revenue, while the graphics segment saw sales decline seven percent due to lower demand for desktop and mobile graphics.

"AMD delivered solid results in the first quarter as we remain focused on improving our execution, delivering innovative products, and building a company around a strategy to deliver strong cash flow and earnings growth," said Rory Read, AMD president and CEO.

"A complete top-to-bottom introduction of new APU offerings, combined with ample product supply resulting from continued progress with our manufacturing partners, positions us to win and grow."

For the current second quarter, Advanced Micro Devices expects revenue to increase up to six percent from the first quarter, to between $1.59 to $1.68 billion. Analysts were expecting $1.59 billion.

Within the global semiconductor industry, Advanced Micro offers x86 microprocessors,  embedded microprocessors for commercial, commercial client and consumer markets and chipsets for desktop and mobile devices.

SanDisk shares were down more than 12 percent before the bell on Friday morning, at $35.58, while Advanced Micro stock rose more than 2.2 percent to $8.15.

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NASDAQ:SNDK
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