Flash, Debt Drag AMD into the Red

Advanced Micro Devices Inc. said Tuesday that it recorded a fourth-quarter loss as the company tried to pay down debt. Processor sales hit a record high.

As expected, however, AMDs Memory Group suffered both an operating loss and a drop in revenues both sequentially and from a year ago. While AMD warned on Jan. 10 that its flash memory sales would be lower than expected, executives said Tuesday afternoon that the loss partially stemmed from a previously undisclosed manufacturing glitch.

For the fourth quarter, AMD recorded a net loss of $30 million and record sales of $1.26 billion, which rose 5 percent from a year ago. AMD used the quarter to pay off some of its debt, which made up a portion of a one-time charge totaling $49 million.

AMDs 2004 results included a net income of $91 million on sales of an even $5 billion, a healthy increase from the prior year, when the company reported a loss of $274 million on sales of $3.52 billion.

AMDs Computation Products Group had a stellar quarter, reporting record dollar sales of $730 million, a 26 percent increase from the previous year. The CPG sales growth was driven by a double-digit percentage unit shipment increase across all segments in the fourth quarter, the company said. Growth was driven by increased server and mobile sales, both in units and dollars. AMDs 64-bit sales now total more than half of its total volume, the company said.

“The fourth quarter was a solid quarter in MPUs, but frankly it was a freakin dismal quarter in flash,” AMD CEO Hector Ruiz told analysts during a conference call Tuesday, adding that the fourth quarter was “an underwhelming end to an otherwise breakaway year.”

Memory sales fell 11 percent on a year-over-year basis to $504 million. The group also recorded an operating loss of $39 million.

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