Advanced Micro Devices AMD incurred a loss of 14 cents per share in first-quarter 2016, lower than the Zacks Consensus Estimate of loss of 15 cents.Following the results, shared surged more than 21.4% in after-hours trading. The rally in the share price was due better-than-expected second-quarter guidance. Management expects Semi-Custom unit shipments and revenue to grow on an annual basis going forward. The company believes that strong demand for game consoles and the ramp of previously announced new business will drive revenues in the second half of 2016.RevenuesAdvanced Micro generated revenues of $832 million, down 13.2% sequentially and 19.2% year over year. The sequential decrease was due to lower sales of semi-custom System on Chip (SoC), while lower client processor sales led to the year-over-year decline. However, first-quarter revenues were above the Zacks Consensus Estimate of $818 million.Advanced Micro has two reportable segments — Computing and Graphics (focused on the traditional PC market), and Enterprise, Embedded and Semi-Custom (focusing on adjacent high-growth opportunities). The details of these segments have been discussed below:Computing and Graphics includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics. This segment accounted for 55% of Advanced Micro’s sales, down 2.1% sequentially and 13.5% year over year. The decrease was due to lower client processor sales. Moreover, decline in the PC industry and the ongoing softness in the Chinese PC market added to its woes.The company saw strong growth in mobile APU sales. The company shipped its seventh-generation Bristol Ridge APUs in March and has secured new design wins. Commercial APU unit shipments increased in the first quarter of 2016. Management expects commercial shipment to grow on high volume wins across both larger enterprises and the public sector. Enterprise, Embedded and Semi-Custom includes server and embedded processors, dense servers, semi-custom SoC products, engineering services and royalties. This segment brought in the remaining 45% of sales, down 23.8% sequentially and 25.3% year over year due to lower semi-custom SoCs sales.Operating ResultsPro-forma gross margin was 32.3%, up 279 basis points (bps) sequentially and 68 bps year over year. The increase was driven by an improved product mix between business segments.Adjusted operating expenses of $340.0 million increased 1.8% sequentially but decreased 8.8% year over year. However, as a percentage of sales, research and development (R&D) expenses increased, while marketing, general and administrative expenses decreased. Pro-forma operating margin was (8.5%) down 634 bps sequentially and 397 bps year over year.The quarter’s GAAP net loss was $109.0 million or loss of 14 cents per share compared with net loss of $180.0 million or loss of 23 cents a year ago. Excluding all special charges but including stock-based compensation expenses, pro-forma net loss was ($112.0) million or loss of 14 cents against earnings of ($90.0) million or loss of 12 cents in the year-ago quarter.Balance SheetAdvanced Micro exited the first quarter with cash and cash equivalence balance of $716 million, down $69 million from the prior quarter. Inventory was $675 million, down from $678 million in the previous quarter.Total debt (short term and long term) was $2.24 billion versus $2.26 billion in the prior quarter. During the quarter, cash used from operations was $42.0 million, while capital additions were $26 million.2Q GuidanceManagement expects second-quarter 2016 revenues to increase 15% sequentially (+/- 3%) driven by a strong demand for Semi-Custom and Graphics products. The Zacks Consensus Estimate is pegged at $888.0 million.The company expects Semi-Custom unit shipments and revenue to grow on an annual basis going forward. The increase will be based on strong demand for game consoles and the ramp up of previously announced new business in the second half of 2016. Also, management believes that AMD's datacenter offerings will result in new design wins that will likely deliver strong revenue growth in 2017 and beyond.Non-GAAP gross margin is likely to be 31%. Non-GAAP operating expenses are projected at approximately $335.0 million. IP monetization licensing gain is expected to be approximately $25 million; non-GAAP interest expense taxes and other are projected at approximately $45 million.Our TakeAdvanced Micro reported decent first-quarter results with both revenues and earnings exceeding the Zacks Consensus Estimate.The company is strengthening its position in key markets with the introduction of several APUs and GPUs. Its Radeon Technologies Group focuses on the graphics business and improving its performance in traditional graphics markets. At the same time, the company is taking initiatives in immersive computing markets like virtual and augmented reality. During the quarter, the company also licensed its high-performance processor and SoC technology to Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC). As part of the licensing agreement, AMD will get $293 million and in return the entity will get processor and system-on-chip technology and design server chips for the Chinese market. This deal should help it to gain share in the fastest growing regional data center server market. The deal will also accelerate the company's growth and better monetize its valuable assets.Currently, Advanced Micro has a Zacks Rank #5 (Strong Sell).Stocks to ConsiderSome better-ranked stocks in the same space are Himax Technologies, Inc. HIMX, Mellanox Technologies, Ltd. MLNX and Pixelworks, Inc. PXLW. All these stocks sport a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ADV MICRO DEV (AMD): Free Stock Analysis Report MELLANOX TECH (MLNX): Free Stock Analysis Report HIMAX TECH-ADR (HIMX): Free Stock Analysis Report PIXELWORKS INC (PXLW): Free Stock Analysis Report To read this article on Zacks.com click here.