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AMD reports sixth consecutive quarterly loss

AMD reports sixth consecutive quarterly loss

AMD posted its sixth consecutive quarterly loss on Thursday. The company hopes to be profitable by year's end.

A weak first quarter has yielded a sixth consecutive quarterly loss at struggling chipmaker Advanced Micro Devices (AMD).

The company posted revenue of $US1.51 billion for its first fiscal quarter of 2008, ended March 29, and a net loss of $358 million, or $0.59 per share. Excluding charges related to the company's 2006 acquisition of graphics chipmaker ATI Technologies, losses were $308 million, or $0.51 per share.

The bad results were in line with analyst expectations. AMD had warned the financial community last week that it would miss earnings expectations by about $100 million, blaming lower-than-expected results because of poor sales across all segments of its business. AMD plans to lay off 10 percent of its 16,800-employee workforce by the third quarter of 2008.

A few days after last week's earnings warning, the company's chief technology officer, Phil Hester, stepped down, adding to the bad news.

AMD had been hoping to turn things around by its second quarter. On Thursday it said it was hoping to again be profitable by year's end.

The company's problems contrast with Intel's relatively healthy financial report announced Tuesday. While AMD blamed its poor performance, in part, on weak demand for its consumer products, Intel's revenue grew, spurred in part by healthy demand for its Xeon server processors and its chips for laptops.

In a conference call with analysts on Thursday, AMD CEO Hector Ruiz hinted that there may be more restructuring ahead. "We need to intensely scrutinize all of our businesses in order to ensure that our core x86 and graphics products are on a healthy path," he said. If other lines of business distract it from that mission, "we will exit those businesses," he said.

AMD is pinning some of its turnaround hopes on its upcoming 45-nanometer processors, which are due to begin shipping in the second half of this year. The company is readying a server chip, code-named Shanghai, as well as a desktop processor, named Deneb.

"Clearly we'll give our product line a good pop when we introduce the 45-nanometer quad-core products," said Bob Rivet, the company's chief financial officer. The first of these products will be available by year's end, AMD said.

The company also expects to boost server sales in the second quarter, by which time a third major vendor will begin selling servers based on AMD's quad-core Opteron processors, the company said. AMD did not name the vendor; the chips are already sold by companies such as Dell and Hewlett-Packard.

AMD's bottom line may also have been hurt by delays with its quad-core Opteron processor, code-named Barcelona. It was supposed to ship last September, but a technical glitch pushed back the chip's rollout until the end of the first quarter.


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