AMD revenue forecast disappoints on weak console demand

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© Reuters. Lisa Su, president and CEO of AMD, gives a keynote address during the 2019 CES in Las Vegas© Reuters. Lisa Su, president and CEO of AMD, gives a keynote address during the 2019 CES in Las Vegas

(Reuters) – Advanced Micro Devices Inc (O:) forecast current-quarter revenue below analysts’ estimates on Tuesday, as demand wanes from console makers ahead of new launches.

Shares of the company fell 3% in extended trading.

Analysts had warned that the company would make lesser money from gaming consoles in the first half of 2020, given inventory is drawn down ahead of launches by Sony (T:) and Microsoft (O:) during the rest of the year.

AMD projected first-quarter revenue to be about $1.8 billion plus or minus $50 million, compared to analysts’ average estimate of $1.86 billion, according to IBES data from Refinitiv.

In the fourth-quarter, sales in its enterprise, embedded and semi-custom segment, which houses chips used in consoles, rose 7% to $465 million, but missed FactSet estimates of $603.8 million.

The disappointing forecast overshadowed strong demand in its computing and graphics segment.

Sales at AMD’s computing and graphics segment, which includes graphic chip sales to data centers, surged 69% to $1.66 billion, beating analysts’ estimate of $1.5 billion, according to market research firm FactSet.

Revenue rose to $2.13 billion from $1.42 billion, beating analysts’ estimates of $2.11 billion, according to IBES data from Refinitiv.

Excluding items, the company earned 32 cents per share, beating estimates of 31 cents.

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