AMD Closes In on Break-Even Point

By Jeffrey Burt  |  Posted 2003-04-16

AMD Closes In on Break-Even Point

Advanced Micro Devices Inc. lost $146 million in the first quarter and saw sales decline 21 percent from the same period last year, but company officials on Wednesday said the company is on target to reach the break-even point by the end of the second quarter.

The Sunnyvale, Calif., chip maker saw its numbers jump from the fourth quarter 2002, including a 4 percent increase in sales. In the fourth quarter, AMD lost $855 million.

PC processor sales came in at $468 million, an 11 percent increase over the fourth quarter, and memory sales of $218 million represented the fourth consecutive quarter of increased sales, officials said.

CEO Hector Ruiz said the stronger quarter was due to a combination of strong product releases and the companys ongoing push to pare $300 million in expenses this year. Included in that push is job reductions, from 14,400 employees a year ago to about 12,100 now. Ruiz said that job cuts will continue in the second and third quarters.

The company has placed $800 million as the break-even point for revenue.

"I see a renewed sense of accomplishment, a new sense of confidence and a new sense of focus at AMD," Ruiz said.

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Among the releases in the first quarter were the Athlon XP 3000+ desktop chip and Athlon XP 2600+ server and workstation processor in February, and its first chip—the low-voltage mobile Athlon XP-M processors—for the thin-and-light notebook space.

AMD also entered into a joint chip-development agreement with IBM, and in March announced a plan with Fujitsu Ltd. to merge their flash memory businesses into a new company.

Going forward, AMD officials said they expect to see flash memory sales increase and processor sales stay flat or increase.

However, Ruiz said the release next week of AMDs 64-bit Opteron server and workstation chip and the launch in September of the desktop 64-bit Athlon 64 processor will be key to the companys financial success this year.

"The announcement of our AMD Opteron family of processors is the single most important event in the history of AMD," Ruiz said. "Its the moment weve been waiting for, its the moment our customers have been waiting for, and its the moment our rapidly growing list of partners have been waiting for."

Though Opteron offers the ability to run 64-bit applications, it will first make its mark in the 32-bit space, industry observers say. Initially designed for one- to eight-way systems, Opteron will compete with Intel Corp.s 32-bit Xeon chips, rather than the Santa Clara, Calif., companys 64-bit Itanium processor.

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