AMD Posts $254 Million Loss in 3Q

The chip maker saw sales decline by 34 percent during the third quarter.

Advanced Micro Devices Inc. lost more than $254 million and saw sales decline by 34 percent during the third quarter.

The loss for the quarter, ended Sept. 29, was more than $67 million more than the company lost during the same period last year, according to numbers released late Wednesday.

The chip maker also said that sales dropped by 32 percent for the first nine months of 2002 over the same year-ago period.

In a prepared statement, AMD officials blamed the sluggish economy and a less-than-expected demand for PCs.

"The sequential decline in third quarter sales was primarily due to the aggressive actions we took in the PC supply chain to align our product mix with current customer and end-user demand, which has been less than we forecasted," Chief Financial Officer Robert Rivet said in a statement.

In forecasting for the fourth quarter, AMD officials said they expect sales of Flash memory devices and PC processors to increase, and that the company will reduce its loss compared to the third quarter.

The poor numbers came about two weeks after AMD warned that it would post a higher than forecasted loss. AMDs finances have taken a hit not only because of the sluggish economy but also because of its efforts to compete with Intel Corp., of Santa Clara, Calif., in the lucrative high-end space. Over the last year, Intel not only has widened the speed gap between its own Pentium 4 chips and AMDs Athlon XPs, the two companies also have engaged in a price-cutting war that has hurt the profit margins of both chip makers.

AMD, of Sunnyvale, Calif., also hurt itself this year by delaying the release of its 64-bit desktop chip, code-named Clawhammer, from the fourth quarter until early next year.

Intel on Tuesday announced its own third-quarter earnings, including a net income of $686 million—an improvement over $106 million it netted during the same period last year—on sales of $6.5 billion.

Still, like AMD, Intel painted a dour picture for the industry, particularly during the holiday season, traditionally the strongest quarter of the year.