Advanced Micro Devices shares soared Wednesday after the chipmaker beat market expectations for its fourth quarter earnings.
THE SPARK: The company reported after the market closed Tuesday that it lost $473 million or 63 cents per share for the quarter, compared with a loss of $177 million, or 24 cents per share, in the same quarter last year. After adjusting for restructuring and other unusual items, the company had a quarterly loss of 14 cents per share.
Revenue fell to $1.16 billion from $1.69 billion last year.
Analysts polled by FactSet expected a loss of 21 cents per share, excluding one-time items, on revenue of $1.15 billion.
THE BIG PICTURE: AMD is the world's second-largest maker of microprocessors behind Intel Corp. Both companies are struggling with a shift in consumer demand away from personal computers, which use their chips, toward smartphones and tablets.
AMD said Tuesday that revenue on the current quarter may fall short of expectations.
The company has cut jobs and sold assets to free up cash for new projects. Investors were cheered by signs the company is being more aggressive in non-PC markets.
THE ANALYSIS: Stifel Nicolaus analyst Kevin Cassidy said AMD turned in respectable results and showed some improving trends.
"We believe management has set a prudent course of not only 'skating to where the puck is going' but also taking a 'hit 'em where they ain't' strategy" the analyst wrote in a research note. "In other words, AMD has developed an indirect strategy rather than confronting Intel directly in each market segment."
Cassidy said the question now is whether AMD can grow revenue while cutting its workforce.
SHARE ACTION: AMD shares were one of the top gainers in the S&P 500 Wednesday, rising 23 cents, or 9.4 percent, to $2.68 in morning trading. The stock has risen nearly 12 percent since the start of the year, but it's lost about two-thirds of its value since March.