SAN FRANCISCO (MarketWatch) -- Shares of Advanced Micro Devices Inc. fell sharply Friday, a day after the chip maker posted results that showed a profit but also highlighted concerns that it's losing ground to Intel Corp.
AMD /quotes/comstock/13*!amd/quotes/nls/amd (AMD 9.67, -0.14, -1.43%) shares fell 3.4% to close at $9.81, a day after the Sunnyvale, Calif.-based company reported it swung to a profit, aided by a big jump in graphics-chips sales and a one-time gain from its deconsolidation of Global Foundries.
AMD reported a first-quarter profit of $257 million, or 35 cents a share, compared with a loss of $416 million, or 66 cents a share, for the year-earlier period. Revenue was $1.57 billion, up from $1.18 billion for the same quarter in the year-earlier period. Adjusted income was 9 cents a share.
However, analysts quickly picked up on troubling signs for the company, given that compared to rival Intel's robust numbers, AMD's profitable quarter didn't seem that impressive.
"The quarter was good -- not phenomenal," Wedbush analyst Patrick Wang wrote in an email late Thursday.
And that pretty much summed up sentiment among analysts who saw the report as a mixed bag.
"AMD's first-quarter results were relatively mixed with revenue slightly better than our estimate, but a disappointment vs. Intel, and margins continuing to improve," Deutsche Bank analyst Ross Seymore wrote in a note.
Wells Fargo analyst David Wong said the company's sales numbers "were quite good, with positive implications for the computer and microprocessor market overall. However, we continue to have market share and profitability concerns with regard to AMD specifically."
Auriga analyst Daniel Berenbaum offered a grim view of AMD's competitive position, writing in a note, "We see no shortcut to AMD to regain market share" in PC chips. ... Given past missteps, we have low confidence in AMD's design and manufacturing execution."
The report marked the first time AMD posted deconsolidated results after the GlobalFoundries spin-off. The company reported a one-time, non-cash gain of $325 million as a result of the new accounting.
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FBR Capital's Craig Berger wrote in a note that "prospects for meaningful cash generation seem impressive, and with the stock still arguably trading in value country."
He said AMD's revenues of $1.57 billion "were a bit ahead of consensus but reflect another quarter of share loss to Intel."
Still, Berger maintained an upbeat view of AMD, especially with the GlobalFoundries deconsolidation, saying, "We believe AMD is truly transforming itself, and few investors we speak with are keeping close tabs on the firm. Indeed, this is not the AMD of yesteryear."
Williams Financial analyst Cody Acree also said the after-hours sell-off "is a classic case of selling the news."
"After reviewing the firm's results, particularly given the economic back drop and the increased forecasts, we saw little disappointment," Acree wrote.
The company's results included a one-time, non-cash gain of $325 million related to its deconsolidation of GlobalFoundries.
Analysts had expected the company to post a loss of 3 cents a share, on revenue of $1.5 billion, according to data from Thomson Reuters. However, it was not immediately clear how analysts computed their estimates due to the change in AMD's accounting.
An AMD spokesman acknowledged in an e-mail that "there is not a great number in our release to use as a comparison as there are discrepancies in the models for the 30+ analysts who cover us."
For the current quarter, AMD said it expects revenue to be "down seasonally."
