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AMD has wobbly Q4, but damn fine year

Upbeat for 2001

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AMD had a record year in 2000, clawing - by its own estimates - three percentage points in unit share for the PC processor market.

But the company failed to match analyst expectations for Q4 and, just like rival Intel yesterday, the chip maker forecasts a weak Q1.

AMD says the usual seasonal weakness in Q1 is compounded this time around by the "effects of excess PC inventories in the distribution channels". Even so, it's still projecting PC sales growth in the mid-teens for 2001.

In a conference call to analysts and hacks, Sanders took AMD's latest roadmap out for a spin. Q1 will see the introduction of 1.3-GHz of Athlon; wave hello in Q2 to 1.4GHz and 1.5-GHz; the 1.7GHz, running on the cooler Palomino core, will debut in the second half of the year. The 64-bit jobbie, Clawhammer, is out and about sometime next year.

The company reckons it will grow faster than the market as a whole this year, on the back of "new versions of the AMD Athlon and MD Duron processors should enable us to participate in the performance mobile, server, and workstation markets".

With the help of continuing strong performance in the flash memory division, this should help the company (or so it reckons) mitigate "the impact of the current slowdown as excess PC inventories work their way through the channels of distribution".

On the manufacturing side, AMD is to speed up the introduction of 0.13 micron technology toward the end of the year, as opposed to 2002. It reckons its Dresden plant will be up to full capacity in 2002, compared with its current production utilisation of 30 per cent.

For Q4, 2000, AMD posted net income of c.$178m on sales of $1.175bn, up 21 per cent on Q4, 1999 - equivalent to 53 cents a share. The consensus analyst forecast was 55 cents a share, according to First Call.

For the full year, the company pumped out sales of $4.64bn, 63 per cent up on 1999. Net income after one-offs was pretty damn healthy at $793.9m, and an even healthier $983m with the one-offs included. The results were certainly good enough to excuse AMD CEO Jerry Sanders to crow about the company's "best year in its history... Our technology and manufacturing organizations distinguished themselves from the competition by executing nearly flawlessly," he said in a statement accompanying the results.

(Now who could the competition be?)

Sanders said the company continued to outperform its peers, despite the "deterioration of the PC market late in the year impacted sales of PC processors in the fourth quarter".

In Q4, AMD shipped just under seven million PC processors, a company record. For the full year, it reckons it took 17 per cent - 26.5 million units - of the PC processor market by shipment (clearly its percentage by value is much lower - as its chips are typically cheaper than Intel performance equivalents, and it gives Intel a free run more or less in the higher price server segment).

According to Sanders demand for Athlon processor held up well in Q4 and dollar and unit shipments for both Athlon and Duron, its cheap and cheerful sister, increased - despite "severe weakness in the North American retail sector of the PC market".

Chipset shortages in the quarter hampered Duron sales, while end-of-product-cycle life pricing for K6-2 CPUs dragged down average unit prices.

As ever, AMD's ever-boring, ever-reliable flash memory ops pulled in the money, with Q4 sales up 10 per cent on Q3, and turnover doubled in 2000. ®

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