Advanced Micro Devices (NASDAQ:AMD) is set to report its third quarter results on October 15 after market close. The company has been struggling to compete against the much larger Intel in the PC CPU market and NVIDIA in the GPU market, and it's unlikely that investors will be treated to much good news in the earnings report. Here's what to expect from AMD's third quarter results.

What analysts are expecting
The average analyst estimate for third quarter revenue is $995.8 million, about 30% lower year-over-year. This is in line with AMD's guidance for the third quarter, which calls for 6% sequential revenue growth. AMD reported second quarter revenue of $942 million.

AMD doesn't provide guidance for earnings, but analysts expect the company to report a non-GAAP EPS loss of $0.12 during the third quarter, down from a $0.03 gain during the same period last year. This loss will be even larger on a GAAP basis; during the second quarter, AMD reported a $0.17 per-share non-GAAP loss, and a $0.23 per-share GAAP loss.

A flurry of announcements
There has been quite a bit of news surrounding AMD since the company last reported earnings. In September, the company created the Radeon Technologies Group, which will be responsible for the development of the company's discrete GPUs, as well as its integrated GPUs. Previously, the CPU and GPU teams were under the same roof, and this move may make a possible spin-off of the graphics business more likely in the future.

Later in September, it was announced that Jim Keller, AMD's chief CPU architect, who returned to the company in 2012 to develop AMD's upcoming x86 Zen CPU core and K12 ARM CPU core, was leaving the company. Zen is scheduled to launch sometime in 2016, with K12 coming in 2017, and I would expect AMD's management to offer some comments on this development during the conference call. AMD has stated that its public product roadmap would be unaffected by Keller's departure.

Layoffs at AMD were announced on Oct. 1, with the company cutting about 5% of its workforce. AMD has been working to cut costs during the past few years, but falling R&D spending has left AMD in a position where it's being outspent by NVIDIA. These layoffs come about a year after the company slashed its workforce by 7%. Management will need to convince investors that slashing costs won't imperil the long-term competitiveness of the company.

Rumors of a possible investment in AMD by a private equity firm surfaced late in September, with Bloomberg reporting that talks were on hold due to disagreements on price and strategy. AMD expects to still have about $700 million in cash at the end of the third quarter, but with the company burning through that cash, the pressure to shore up the balance sheet is increasing, especially with no sign that AMD will be able to return to profitability anytime soon.

Key things to look for
I wouldn't be surprised if AMD announces that it is exploring strategic alternatives along with its earnings report. Possibilities include spinning off the graphics business, selling a minority stake, or even an outright sale of the company. The most important information for investors will not be the numbers -- those are sure to be disappointing -- but, instead, an update on the company's long-term strategy.

The CPU business is unlikely to meaningfully improve before Zen is launched, barring a dramatic resurgence of PC sales. Until then, AMD is stuck with products that aren't very competitive against Intel, and investors should expect continued losses from the CPU business. Sales of semi-custom chips for the game consoles will continue to partially counteract weak PC CPU sales, but it hasn't been enough to prevent AMD from reporting losses.

The graphics business could potentially improve for AMD during the third quarter. AMD launched a slate of new graphics cards at the very end of the second quarter, and while the launch certainly didn't light the world on fire, it's hard to imagine AMD's position in the graphics card market getting much worse. The company sold just 18% of discrete graphics cards during the second quarter, down from around 40% one year ago.

But it's also hard to imagine things getting all that much better. AMD's high-end Fury X faced availability issues for weeks after launch, and its entire 300 series of graphics cards are rebrands of the previous 200 series launched in 2013. That may be enough for AMD to win back some market share, but I wouldn't bet on a major reversal of fortunes.

The third quarter is likely to be another disappointing one for AMD investors. The stock has tumbled about 30% so far this year, and while any good news at all could very well send the stock soaring, given all the bad news already priced in, AMD will need to lay out a compelling long-term strategy to keep investors onboard.

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.