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AMD's profitability streak ends at two quarters

AMD's profitability streak ends at two quarters

The company reported a net loss of $20 million in Q1

Advanced Micro Devices posted a net loss after two straight quarters of profits.

Advanced Micro Devices posted a net loss after two straight quarters of profits.

Advanced Micro Devices' bottom line changed from black to red on Thursday when the company posted a loss after two straight quarters of profits.

The company reported a net loss of US$20 million, or a loss of $0.03 per share, for the first fiscal quarter of 2014, an improvement from a loss of $146 million in the first quarter of the previous year.

However, the company reported a net profit in the two previous quarters, as a restructuring program led by CEO Rory Read and a new management team showed positive results.

AMD reported revenue of $1.40 billion, up 28 percent year over year in the quarter ended March 29. Analysts polled by Thomson Reuters expected revenue of $1.34 billion.

As part of the restructuring over the past two years, Read appointed a new management team, reshaped the product road map, laid off staff and established a new division to make custom chips.

Revenue growth was mainly driven by the Graphics and Visual Solutions unit, which makes graphics chips like the R7 and R9 and "semi-custom" chips, and whose revenue totaled US$734 million, up 118 percent. Semi-custom chips sold by AMD include processors sold to Microsoft for the Xbox One and to Sony for the PlayStation 4.

However, PC chip shipments and revenue declined during the quarter. Revenue from the Computing Solutions division -- which deals in PC, tablet and server chips -- was $663 million, down 12 percent.

AMD introduced new Sempron and Athlon chips during the quarter for the U.S. and Asia markets. The company also shipped new Kabini processor models for PCs. More x86 chips for PCs and tablets are expected to be announced this quarter. AMD is also developing x86- and ARM-based server chips.

The company is well-positioned to grow profitably, backed by the x86 processors, Read said in a statement.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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