AMDs $15.8 Million Loss Better Than Expected

By eweek  |  Posted 2002-01-17 Print this article Print

The company posted a smaller loss for the fourth quarter than analysts had projected and expects to return to profitability in Q2.

Advanced Micro Devices Inc. posted a smaller loss for the fourth quarter than analysts had projected, due, according to the company, to stronger than expected holiday sales of its microprocessors. The No. 2 PC chipmaker reported a net loss of $15.8 million, or five cents a diluted share, for the three-month period, which was significantly better than Wall Street projections of a loss of 18 cents per share, according to Thomson Financial/First Call.
Fourth quarter revenues totaled $952 million, down 19 percent from the $1.2 billion reported last year, but well above analysts projections of about $840 million.
AMD Chairman Jerry Sanders hailed strong sales of the companys Athlon and Duron processors for enabling the chipmaker to top analysts and its own forecasts. "Excellent market acceptance of the newly introduced AMD Athlon XP processor (launched in October)… enabled AMD to turn in a strong quarter," he told analysts in a conference call Wednesday. "Processor revenues surged more than 50 percent sequentially." Strong sales of its most powerful and costly Athlon chips also helped push up the average selling price for AMD processors, Sanders said. For the year, AMD lost $60.6 million, a marked turnaround from the $983 million in profit it collected last year. Sales totaled $3.9 billion for the year, a 16 percent decline from the $4.6 billion in 2000. In general, AMD was hard hit by a rapid decline in processor prices this year spurred by cost cutting initiated by the chipmakers much larger rival, Intel Corp. The price war, which Sanders contended hurt both companies, undermined what was otherwise a banner year for AMD chip sales, with the company shipping nearly 8 million chips during the quarter, a record for the company. But while processor sales remained brisk, AMDs flash memory business fizzled, continuing its yearlong slide in the fourth quarter with sales falling 7 percent from the previous quarter. For the final three months of 2001, sales of its flash memory products totaled $196 million, a 57 percent decline from the same period last year. AMD predicted that its flash memory sales will continue to slip in the first quarter, resulting in another quarterly net loss, despite what it expects will be continued strong sales of its PC processors. Further out, the chipmaker expects to return to profitability during the second quarter, and that stronger sales in the second half of the year will enable it to end 2002 in the black.

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