AMD Posts Q1 Loss, But Beats Estimates

By eweek  |  Posted 2002-04-18 Print this article Print

Despite selling a record number of PC processors, Advanced Micro Devices Inc. reported it lost $9 million during the first quarter.

Despite selling a record number of PC processors, Advanced Micro Devices Inc. reported it lost $9 million during the first quarter as continued price competition and falling sales of flash memory undermined earnings. While AMDs loss was a far cry from the profit of $124.8 million it posted during the same period a year ago, the loss was smaller that many Wall Street analysts had expected.
For the quarter, AMD lost $9.16 million, or 3 cents a share, on revenue of $901.1 million, down from $1.19 billion a year earlier. Wall Street analysts had been expected a loss of 6 cents per share, according to consensus estimates compiled by Thomson Financial/First Call.
During the first three months of the year, AMD said it sold a record 8 million Athlon and Duron PC processors, up about 3 percent from a year ago. While AMDs processor sales have remained relatively strong despite a dip in worldwide computer sales, the company has reduced its profit margins on each chip sold in order to match price-cutting moves by market leader Intel Corp. Weak sales of AMDs flash memory products, once the companys fastest growing product category, have also undermined earnings during the past year. But AMD Chairman Jerry Sanders said hes optimistic that demand for flash products, which are featured in cell phones and handheld computing devices, will soon rebound. Revenue from processor sales totaled $684 million in the first quarter, up 3 percent from a year ago. Flash memory sales, which largely collapsed last year, continued to remain weak, and totaled only $160 million during the quarter, a 61 percent decline from the $411 million in revenue AMD recorded a year ago. "While sales of flash memory products once again declined substantially, there are signs that the industry flash crash is now behind us," Sanders said in a statement accompanying the earnings release. "Demand was strongest for our higher-density flash memory devices, and we are seeing signs of a recovery in the cellular telephone sector." Looking ahead, however, AMD projected revenues would decline another 5 to 10 percent due to a traditional dip in seasonal buying patterns, with revenue totaling between $820 million and $900 million for the three-month period.

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