AMD losses top $3bn in 2008
Present "crummy," future "murky"
AMD has released its financial report for the fourth quarter of 2008, along with totals for the full year. The numbers aren't pretty, but the company seems reasonably confident about its future.
That confidence was expressed during a conference call this afternoon with analysts and journalists - though the company's president and CEO Dirk Meyer referred to uncertain product demand as "the real wild card" when forecasting 2009 and his multi-hatted EVP, COO, CAO, and acting CFO Robert Rivet referred to the future as "murky."
Meyer and Rivet avoided most hard numbers when describing the company's prospects for 2009, but they offered a guardedly optimistic goal of reaching a $1.3bn break-even point at the end of Q2.
A lot of work will need to be done to make 2009 an improvement over 2008. Last year, today's report revealed, AMD had a net loss of $3.098bn on revenues of $5.808bn. While falling into a $3.098bn hole must be painful, AMD is better off than it was in 2007, when it lost $3.379bn on revenues of $5.858bn.
The fourth quarter of 2008 was particularly bad. AMD lost $1.424bn in Q4, a period that Meyer described as "usually the year's strongest quarter." Still, that's an improvement over the same quarter in 2007, when the net loss was $1.772bn.
Naturally, Meyer blamed those loses on "the Q4 meltdown," which caused microprocessor sales to be "down across the board."
Meyer said that the company is responding to the fiscal strain by being "laser-focused" on "preserving and generating cash" as well as "protecting current investment." Rivet added that AMD plans to "hold our roadmap intact and service our customers."
45nm on track
Part of holding that roadmap intact will be making no changes in the company's efforts to move a majority of its products to a 45nm process in the current quarter and to continue development of a 32nm process.
The continued move to 45nm will not only help keep AMD competitive with Chipzilla. It will provide a direct financial boost as well. Moving to 45nm lowers costs.
AMD's manufacturing arm is being drastically slowed in order to keep inventory levels low - so much so that for the immediate future, "factory utilization will be crummy" because "we're slowing everything down pretty considerably."
Also shrinking will be pay stubs. AMD recently announced a "temporary" comprehensive salary-reduction plan.
Meyer said that "In Q1, our server business will be our strong suit," but it looks like laptop-chip sales have yet to bottomed out. The notebook supply chain is a long one and orders from Asian laptop makers may not yet reflect the crunch.
After Rivet said that there's been a "massive inventory correction in the fourth quarter," he asked rhetorically, "Is it done? We don't feel like it's done in the notebook space." To shrink inventories, Meyer said, "We're manufacturing below our shipment level."
When asked if the recent changes in Washington will affect those plans, Meyer said that there will be "no new closing conditions as a result of the change in administration." (In a related development, AMD today claimed that Intel is trying to sow "uncertainty" to delay or scuttle the deal.)
Finally, when asked for specific numbers on the company's planned - hoped for? - resurrection, Meyer admitted that "its awfully tough to forecast," because demand is "the real wild card."
As Rivet put it, "the current environment is pretty murky" and "It's an appropriate time to be cautious because the outlook is so murky."
Our dictionary defines murky as "dark and gloomy."
Seems about right. ®