Despite massive restructuring efforts, chip maker AMD reported another quarterly loss of $416 million as the global recession continued to depress chip sales. Furthermore, company officials said sales and revenue will likely be down in the second quarter as well. However, AMD Chief Financial Officer Robert Rivet predicted the company will become cash flow positive in the 2009 second quarter as the results of the restructuring take effect.With the continuing recession negating its efforts to return to
profitability, Advanced Micro Devices reported that it sustained a net loss of
$416 million for its 2009 first quarter on revenue of $1.177 billion.
But AMD CEO
Dirk Meyer tried to sound upbeat as he discussed the quarterly results during
an April 21 conference call reporting the company's earnings for the first
quarter of 2009. We continued to beat or exceed our road maps for the
quarter, said Meyer.
AMD, consolidating the operating results
of Global Foundries in its results as of March 2, 2009, reported first-quarter 2009 revenue of
$1.177 billion. First-quarter revenue was flat, compared with the fourth
quarter of 2008, and decreased 21 percent when compared with the first quarter
of 2008.
However, Robert Rivet, AMDs chief
financial officer, said the company has made progress in reducing costs and
improving operating efficiency. We are executing well in every major
aspect of our strategy, Rivet said. We enter 2009 a very different company
than the one you were following as recently as a year agoa much nimbler
company.
For the quarter, AMD reported a net loss
of $416 million, or $0.66 per share, which includes a net unfavorable impact of
$22 million, or $0.04 per share. The companys operating loss was $308 million.
AMDs first-quarter 2009 gross margin was
43 percent, including a positive impact of 5 percentage points due to a $64
million benefit from the sale of inventory written down in the fourth quarter
of 2008. Gross margins for the fourth quarter of 2008 were 28 percent. The
first-quarter 2009 gross margin for AMD,
excluding Global Foundry, was 34 percent.
We delivered on a number of important priorities in the first quarter,
Meyer said. We launched Global Foundries, maintained our cadence of new
product and platform introductions, and made solid progress on our
restructuring activities.
AMDs
official launch of Global Foundries on March 4 created a rift, and
eventually a lawsuit, between AMD and Intel. Intel claims that, in creating
Global Foundries, AMD has breached the terms of their 2001 cross-licensing
agreement.
AMD denies the allegation, and on
March 16 filed documents with the U.S. Securities and Exchange Commission,
stating that in accusing AMD of breach,
Intel itself committed a breach. AMD
officials did not discuss the status of the lawsuit during the April 21
earnings call.
Intels first-quarter 2009 earnings, which were announced April 15, were
anticipated as a bellwether for the industry. According to analysts, Intels
profits of $670 million on its
reported revenue of $7.15 billion offered a glimmer of hope for better times
ahead.
In fact, analysts found reasons to offer AMD
congratulations during the earnings call despite reporting yet another
quarterly loss. The company showed growth in notebook and desktop sales, but
the growth was not strong enough to offset losses in other areas, according to
Meyer.
Server was the weak spot, said Meyer. Strongest growth was in notebooks,
and then desktops were reasonable, but still grew. And that added to a positive
for quarter to quarter. First-quarter 2009 revenue for computing solutions
totaled $938 million. Graphics system revenue totaled $222 million.
When asked about cash flow projections, Rivet responded, Im positive well
be cash positive in the second half of the year. Whether that would cover cash
flow problems in the beginning of the year he wasnt sure, he said.
Regarding the second quarter, the tone was more conservative. The second
quarter is seasonally a down quarter, said Rivet. We believe theres still
some supply chain things to work through. Were just being cautious at this
point, and saying potentially well be down.
When asked when one might watch the calendar for an update on AMD's
legal dispute with Intel, both men offered no comment.
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