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Source: AMD.

Advanced Micro Devices (NASDAQ:AMD) is set to report its fourth-quarter results on Tuesday, Jan. 19, following the market close. With global PC shipments slumping 10.6% year over year during the fourth quarter, according to IDC, investors should brace themselves for disappointing results from the beleaguered company.

What analysts are expecting
On average, analysts expect AMD to report quarterly revenue of $954.7 million, down 22.9% year over year. For the full year, revenue is expected to come in just below $4 billion, 27.6% below revenue from 2014. The average analyst estimate is right in line with AMD's guidance for a 10% sequential decline in revenue during the fourth quarter.

Analysts expect non-GAAP earnings to come in at a loss of $0.10 per share compared to breakeven during the fourth quarter of 2014. During the third quarter, AMD posted a non-GAAP loss of $0.17 per share, but this number included a $65 million inventory writedown. Excluding this one-time item, non-GAAP earnings would have been a loss of $0.09 per share.

Analysts are expecting things to get better for AMD in 2016. Revenue is expected to decline by just 1.1%, while earnings are expected to improve, albeit remaining negative. This isn't much consolation for shareholders, who have watched shares of AMD tumble by 72% during the past five years. But 2015 may mark the bottom for AMD's earnings.

Things won't get better until late 2016
Barring surprise market-share gains for AMD in either the CPU or GPU markets, there likely won't be much to like in AMD's fourth quarter earnings report. However, 2016 will be a big year for the company, with new GPUs and CPUs set to launch, in addition to the first recognized revenue from the non-console semi-custom design wins that AMD has announced during the past couple of years.

On the GPU front, AMD has lost considerable market share to rival NVIDA (NASDAQ:NVDA) during the past year, and while its launch of new high-end graphics cards in 2015 stopped the bleeding, the company has become a distant No. 2 player. NVIDIA shipped more than 80% of discrete graphics cards during the calendar third quarter, following years of maintaining a market share of roughly 60%.

Both AMD and NVIDIA plan to launch new lines of GPUs built on 14/16nm nodes in 2016, after years of being stuck with 28nm GPUs. The performance and efficiency gains from both camps should be meaningful. If AMD can put out competitive products on time, the company could claw back some market share from NVIDIA.

On the CPU front, AMD expects to begin shipping Zen-based CPUs in 2016, with the company hoping to make progress in the high-end client and server markets in 2017 and beyond. AMD is aiming for Zen to deliver a 40% increase in instructions per cycle compared to its previous generation of CPUs. If the company both achieves this goal and launches the products on time, Intel may have some real competition in the PC and server markets.

AMD investors should look to the conference call for details on both of these initiatives. AMD recently revealed some details about its upcoming graphics architecture, Polaris, confirming that the GPUs will be built on a 14nm FinFET process, and launch in mid-2016. NVIDIA will be launching its own GPUs based on its next-generation Pascal architecture around the same time, with the same kinds of performance improvements, so AMD will need to put out truly exceptional products in order to grow its graphics business in 2016.

With Intel delaying its launch of 10nm processors, Intel's manufacturing lead will narrow dramatically if AMD can launch Zen on time. Any comments during the conference call that suggest that Zen has been pushed back would be bad news for the company, as AMD's CPU business is essentially dead in the water until Zen arrives.

Lastly, investors should look for more details on AMD's semi-custom design wins. AMD expects to start recognizing revenue during the second half of the year, and with the current generation of game consoles expected to peak in terms of sales at some point during the next couple of years, this additional revenue will be crucial to growing the semi-custom business.

Another bad quarter
A big revenue decline and continued losses will be the theme of the fourth quarter for AMD, but investors certainly have reason to be more optimistic about 2016. AMD is still in a very difficult position, and both its new GPUs and new CPUs could very well fail to gain enough traction to return the company to profitability. If AMD can launch compelling products, however, it could win back some much-needed market share.

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Timothy Green owns shares of Nvidia. The Motley Fool recommends Intel and Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.