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Shares of Advanced Micro Devices, Inc. Tumble on Soft 2014 Guidance

By Anders Bylund – Jan 21, 2014 at 6:01PM

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AMD's fourth quarter was in line with analyst targets, but the full-year outlook for 2014 came in weak. Shares tumbled more than 11% on the news.

Advanced Micro Devices (AMD -1.42%) just reported results for the fourth quarter and full year of 2013. The report matched analyst estimates but forward guidance was disappointing. AMD shares crashed hard on the news, falling as much as 11.7% in after-hours trading.

AMD reported non-GAAP earnings of $0.06 per share on sales of $1.6 billion in the fourth quarter, in line with analyst targets. Sales jumped 38% year over year on strong sales of semi-custom chips, like the processors powering modern gaming consoles. Over 30% of AMD's sales came from semi-custom and embedded chips in the second half of 2013, according to a separate sheet of commentary by CFO Devinder Kumar.

Looking ahead, AMD expects first-quarter sales to drop 16% sequentially, in line with typical seasonal patterns. For the 2014 fiscal year, AMD CEO Rory Read set the tone as follows: "Our focus in 2014 is to deliver revenue growth and profitability for the full year by leveraging our differentiated IP to drive success in our targeted new markets and core businesses."

These goals seem modest next to Wall Street's substantial sales growth and net income projections. That's the sticking point behind AMD's dramatic after-hours plunge.

Fool contributor Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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