AMD's Q1 revenue goes missing

Cost structure and large bunny blamed

By Ashlee Vance in Mountain View • Get more from this author

Posted in PCs & Chips, 9th April 2007 14:38 GMT

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AMD has walloped investors with its second revenue warning in as many months.

The chip maker today revealed that it expects first quarter revenue to come in at $1.23bn. That's miles away from a onetime forecast of revenue between $1.6bn and $1.7bn. A price war with Intel and falling channel sales are both to blame for the first quarter whiff.

Last month, AMD warned that channel sales issues would impact Q1, which ended March 31. The company, however, declined to issue an exact revenue target.

Now it has tossed out the $1.23bn figure and some more news. AMD will engage in broad restructuring to lower 2007 costs by close to $500m.

AMD provided little detail on how it will rework its business model, but vowed the moves would not hurt its ability to crank out chips.

Not too long ago, AMD's soaring shares were closing in on the $45 mark. The company enjoyed a large technology lead over Intel in the server and PC markets and made the most of the edge by gobbling up market share.

In 2006, Intel roared back to life with a refreshed product line of its own. The giant has leveraged the better technology along with brutal pricing pressure in a bid to put AMD back in its place.

Investors today appeared pleased with AMD's cost-cutting promise. AMD's stock rose close to 4 per cent in early trading, hitting $13.34 at the time of this report. ®

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