AMD records 11th straight loss
Intel not feeling its pain
To appreciate the woe that comes when you're Advanced Micro Devices, look no further than the No. 2 PC processor maker's second-quarter financial results, which were announced Tuesday.
While Intel and Texas Instruments are widely believed to have stabilized during the same period, AMD remained mired in a deep funk that saw the company report its 11th straight loss and its third year-on-year revenue decline. Slumping processor demand across the board also drove down gross margin to 37 percent, from 38 percent in the same quarter last year.
"In the second quarter, despite softness in the global economy, end-user PC demand stabilized, but the characteristics of the economy are playing out quite differently across customers, channels and particularly geographies," CEO Dirk Meyer said during a conference call with analysts and reporters. Translation: the tide lifting some boats isn't being enjoyed by all.
For the quarter that ended in June, AMD's loss narrowed to $330m, or 49 cents a share, from $1.92bn, or $1.97a share, in the same period last year. The red ink would have been much worse but for $86m, or 13 cents a share, in sales of older inventory AMD wrote down in the fourth quarter.
Sales slid 13 percent to $1.18bn from $1.36 in the second quarter of 2008. The resulting excess fabrication capacity, combined with lower average selling prices, were the two biggest contributors to AMD's lower gross margins.
Second-quarter sales came in below analyst expectations, and AMD's forecast that revenues will be "up slightly" during the current period mean the company isn't likely to meet forecasts for a 7-percent increase analysts had projected.
The company's shares sank 48 cents, or 12 percent, in after-hours trading to $3.60.
With things as bleak as they are at the moment, Meyer naturally turned attention to newer products. The current quarter will be the first to fully incorporate sales of its new six-core Istanbul processor, which is compatible with current sockets to make upgrading easy.
The company is also expecting gross margins in the second half of 2009 to improve, in large part because a larger percentage of chips sold will be made using 45-nanometer features, which cost less to make. ®
Rooting For The Underdog
Would we have decently working 64-bit chips (and decently working 64-bit instruction sets) without AMD? This is possibly their most important contribution. Dragged Intel kicking and screaming along for the ride, for which I am very grateful.
My preference even now is for AMD systems over Intel, but I have to admit the desirability gap has narrowed considerably over the years.
Oh, and Mr. Bartlett? "Deep funk" is a term that existed long before the seventies, it is not equivalent to "funky", and yes, it is still in current usage.
"compatible with current sockets"
How about that, it takes eleven losses to learn a lesson.
AMD started with a foot in the grave....
before they seriously applied pressure to Intel circa 2000 with Athlon CPUs. If not for competition from AMD, we would probably be reaching the 1GHz range with x86 just now, and there would be no x64 as we know it today.
I for one have had very little issues with AMD-based systems. They are rock solid and, in the past, had been a serious contender to Intel dominance. Here's to hoping that a slimmer, trimmer, fab-less AMD will return to the ring with an ultra-low power, mobile, CPU/chipset a la Tegra.
For most people today, the allure of personal computers is really due to the Internet; Facebook, twitter, etc all run in a browser, therefore the vast majority of future computing will be on line. Although a driving innovative force, the super power desktops of today will be a niche market for most manufacturers going forward. The all-in-one netbook/smartbook/net-top market is the real battleground and even ARM is going to have a go at it, so don't count AMD out just yet.