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AMD reports hefty loss but beats the Street

AMD reports hefty loss but beats the Street

Advanced Micro Devices reported a loss last week of 72 cents per share for its third quarter, although strong sales of its flash memory products and faster versions of its new Athlon processor helped it stay ahead of analysts' expectations.

Revenues for the quarter, which ended September 26, were $US662.2 million, down 3 per cent from a year ago, but up 11 per cent compared with the immediate prior quarter, AMD said.

The Californian company reported a net loss for the quarter of $105.6 million. That compares favourably to a loss of $161.8 million after adjustments in the prior quarter, but is down from its net profit of $1 million in the third quarter of 1998.

Analysts polled by First Call had expected AMD to report a loss of 97 cents per share for the quarter, a figure it soundly beat by 25 cents.

Sales of PC processors used in Windows computers increased more than 20 per cent over the immediate prior quarter, to 4.5 million units, while flash mem-ory sales increased 28 per cent, William Sanders, the company's chairman and chief executive officer, said in a conference call with press and analysts.

The earthquake in Taiwan took a toll on sales of the company's high-performance Athlon processors and may continue to have a negative impact in the future, he said.

Availability exacerbated

"Limited AMD Athlon motherboard availability during the third quarter was exacerbated by the Taiwan earthquake on September 21, which shut off motherboard shipments in the final week of our quarter," Sanders said in a statement.

The company managed to sell "hundreds of thousands" of Athlons in the quarter, he said in the teleconference. The company's goal of selling 1 million Athlon chips by the end of the year depends on how quickly the Taiwanese foundry manufacturers, which make important components that work alongside AMD's Athlon processor, recover from the earthquake, he said.

AMD's Athlon processors bring in much higher profit margins than its previous generation K6-2 and K6-3 processors, and are important to the company's financial health.

The company is on target to introduce a 750MHz version of the Athlon in the first quarter of 2000, Sanders said.

Separately, AMD said it plans to sell off its Communications Group, which makes chips for telecommunications and data communications equipment, including modems. The division employs about 400 people and had sales of about $70 million in the most recent quarter, AMD said.

The company hopes to complete the sale in the first half of 2000.


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