AMD Posts $400M Q3 Loss

AMD reports that revenue is up, but slimmer margins and a $120 million acquisition sapped the bottom line.

Advanced Micro Devices posted a net loss of $396 million, down from a $136 million gain a year ago, and the chip makers fourth straight fiscal quarter loss.

AMD posted $1.6 billion total revenue for the third quarter—an improvement of 18 percent compared to the second quarter of 2007 and nearly 23 percent better than the $1.3 billion it posted a year ago—but a $120 million charge for the 2006 acquisition of ATI hurt AMDs bottom line. Wall Street analysts had anticipated $1.52 billion in revenue.

The loss comes at a time when demand for PCs is high. On Oct. 17, IDC reported that worldwide PC shipments increased about 15 percent during the third quarter and AMD reported that its microprocessor shipments increased 16 percent compared to the second quarter of this year.

Despite those numbers, AMDs gross margins—a key metric in determining profitability and market share—were down to 41 percent compared to 51 percent this time last year.

The numbers indicate AMD shipped more processors this quarter than the last quarter, but predominantly the lower priced laptop and desktop models, meaning AMD-based notebooks and desktops were less expensive to buy. Higher costs also impacted the margin.

/zimages/2/28571.gifClick here to read eWEEKs interview with AMD CEO Hector Ruiz.

Earlier this week, Intel reported a net income of nearly $1.9 billion for the third quarter, although the average selling price for its microprocessors remained flat. The company was able to turn a profit by selling more processors and cutting costs.

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