Under heavy pricing pressure from rival Intel, microprocessor maker Advanced Micro Devices (AMD) issued a warning that it may incur an operating loss in its first fiscal quarter, which ends in March.
The latest consensus estimate from brokers polled by research company First Call was for AMD to post a profit of 13 US cents per share for the quarter. In the first fiscal quarter of 1998 the company reported a loss of 39 cents per share.
"In light of Intel's recent pull-in of its February 28 price reductions to February 8, and pending product announcements, we are re-assessing our competitive response," Jerry Sanders, AMD's chairman and chief executive officer, said in a statement.
AMD expects to produce a greater number of faster microprocessors in the quarter, which command higher selling prices. But the pricing pressure from Intel, combined with planned research and development spending, means AMD could incur a loss for the quarter, Sanders said.
Analysts said AMD has successfully gained share in the PC microprocessor market at Intel's expense in recent quarters, particularly in the market for low-cost computers. But Intel has responded by saying it will continue to cut prices aggressively in order to regain its share, which traditionally has been above 80 per cent.