AMD Loses $185 Million in 2Q

Chipmaker continues to suffer losses amid a downturn in computer sales and aggressive price competition from much larger rival Intel.

Advanced Micro Devices Inc., the worlds second largest PC chipmaker, posted a quarterly loss of $184.9 million on Wednesday, even worse than analysts already dour expectations, as the company continues to suffer losses amid a downturn in computer sales and aggressive price competition from its much larger rival Intel Corp.

The chipmakers loss of 54 cents a share was more severe than the 45 cents per share Wall Street analysts were predicting, according to Thomson Financial/First Call. During the quarter, AMD, of Sunnyvale, Calif., twice warned investors that sales of its PC processors and flash memory chips were falling below projections.

Revenue for the quarter fell to $600 million from $985 million a year ago. The results were a far cry from the companys optimistic projections in April, when it forecasted that sales would total between $820 million and $900 million.

"A weaker than expected PC market, particularly in North America and Europe, resulted in soft microprocessor demand in a highly competitive market," Robert J. Rivet, AMDs chief financial officer, said in a statement.

Sales of AMDs desktop and mobile Athlon processors totaled only $380 million for the quarter, a 35 percent drop compared to the same period a year ago.

During the quarter, AMD executives admitted the company is unable to compete with Intels Pentium 4 processor for the high-end of the PC market due to Intels current 700MHz speed advantage over AMDs fastest chip. While AMD strongly contends its chips perform faster than Intels at the same frequency, it has acknowledged that it has had to counter its perceived speed disadvantage by pricing its products lower, thereby undermining its earnings.

Sales of AMDs flash memory chips, which account for slightly less than a third of the companys revenues, were down 45 percent from last year, but up 9 percent from the first quarter, suggesting that demand has finally picked up after a more than year-long slump.

Memory sales totaled $175 million in the second quarter compared with $316 million in second quarter of 2001 and $160 million in the first quarter of 2002.

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