Boston, MA 01/07/2013 (wallstreetpr) – Advanced Micro Devices, Inc. (NYSE:AMD) is one of the unexpected winner of the console war between Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE).
The Gaming Console Business:
Gaming consoles sector enjoys steady sales, but both Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) came out with new models in November 2013. Experts had been divided about the future of this sector given that PC sales were falling and trends showed that teens preferred to play games on smartphones. The question was whether people would invest $400 to $500 in purchasing new consoles? With both Sony Corporation (ADR) (NYSE:SNE) and Microsoft selling 1 million consoles each within 24 hours of launch, the question has been answered. With the console sales expected to total 66 million by 2018, Advanced Micro Devices, Inc. (NYSE:AMD)’s strategy of concentrating on this sector seems to have paid off. Though exact figures are not available, it is expected that AMD must be earning about $100 per console. As it supplies to both Microsoft as well as Sony, it can expect to reap the benefits.
However, this is not the only sector the company is banking upon. It also plans to ramp up its marketing efforts in other segments.
Cost Cutting Measures to boost profits
Falling sales of PCs was a matter of concern for Advanced Micro Devices, Inc. (NYSE:AMD) as the company derived substantial revenues from this sector. But, not only were the sales decreasing, it was facing competition from Intel Corporation (NASDAQ:INTC), the dominant market leader. Advanced Micro Devices, Inc. (NYSE:AMD)’s diversification in the gaming console business was a move in the right direction. With revenues taken care off, the company is also concentrating on cost control measures. As part of the restructuring plan, AMD has cut down its head count and also reduced expenditure. It plans to achieve positive free cash flow by 2H2013.
A strong and consistent revenue stream coupled with cost cutting measures will ensure that Advanced Micro Devices, Inc. (NYSE:AMD) may turn in stellar performance in 2014.
