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AMD delivers on promise of Q2 disappointment

Server up, desktop down

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AMD did everything it promised during the second quarter. The company underwhelmed investors, while posting healthier results than rival Intel.

AMD reported revenue of $1.22bn and a profit of $89m for the second quarter. Those figures compare to revenue of $797m and a profit of $11m in the same period last year, excluding the memory business that AMD has spun-off as Spansion.

On the one hand, the results reflect AMD's tremendous year-on-year growth. The company, however disappointed investors by not beating out the results from its first quarter. AMD warned earlier this month that the second quarter numbers would likely come in 9 per cent below the first quarter revenue of $1.33bn. True to forecast, AMD's Q2 revenue rolled in 8.7 per cent below the Q1 mark.

Still, AMD's year-over-year growth proved more impressive than Intel's 60 per cent profit slide reported yesterday.

Both companies are locked in a fierce price-war on the desktop and server processor fronts. AMD hopes to keep the momentum around its processors, while Intel is betting that a new line of processors will blunt AMD's prospects.

"While we achieved 53 per cent year-over-year sales growth and recorded our twelfth consecutive quarter of greater than 20 per cent year-over-year microprocessor sales growth, we are dissatisfied by not reaching our second quarter sales target," said AMD's CFO Robert Rivet.

Sales of the Opteron chip rose 26 per cent when compared to the first quarter, but AMD was hurt by slower than expected desktop processor sales. Overall, AMD's processor shipments dipped 4 per cent from the first quarter.

Investors hammered AMD shares in the after-hours markets. AMD dropped more than 6 per cent to $20.30 per share at the time of this report. The company once enjoyed a 52-week high of $42.70. ®

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