AMD Posts First-Quarter Loss But Beats Expectations

For the three months ended March 31, AMD lost $9.2 million, or 3 cents a share, compared with a profit of $124.8 million, or 37 cents a share in the same period a year ago.

Revenues were down 24 percent to $902 million, compared with $1.2 billion last year. But AMD said it sold 8 million PC processors, a record for the quarter.

Analysts were expecting a loss of 6 cents a share on revenues of $900 million, according to a survey by Thomson Financial/First Call.

Sunnyvale, Calif.-based AMD has posted losses for three quarters, the result of the high-tech crash and a fierce price war with rival chipmaker Intel

Analysts expect AMD to return to profitability by the end of the third quarter in September.

Processor sales--including AMD's Athlon and Duron lines--totaled $684 million, up 3 percent from $661 million in 2001.

Revenue from memory products, including flash chips widely used in cell phones, continued to be weak but are showing signs of recovery, said W. J. Sanders III, AMD's chief executive. In the first quarter, sales fell to $160 million from $411 million a year ago.

"While sales of flash memory products once again declined substantially, there are signs that the industry flash crash is now behind us," Sanders said.

AMD said second-quarter revenues are expected to fall--in line with seasonal trends--by 5 percent to 10 percent over the first quarter.

Sanders also said it will be difficult for AMD to continue gaining market share because the greatest areas of growth in the PC market are weak spots for the company.

"In those areas that are showing strong growth, Intel has significantly stronger market position than does AMD," said Thomas Thornhill III, an analyst at UBS Warburg. "In an environment where overall PC growth is going to be flat to down, it makes it difficult for AMD to hold or change share."

On Tuesday, Intel posted profits in line with expectations but its stock surged after it said gross margins were improving because of higher selling prices and better factory performance through new technologies.

AMD also is implementing new manufacturing techniques to build faster processors that cost less.

On Wednesday, AMD announced four versions of its Mobile Athlon XP processors, the first developed with a process that shrinks the size of transistors, improves performance and factory efficiency.

In a sign of the fierce competition, Intel also unveiled five new mobile processors Wednesday.

Shares of AMD gained 47 cents to $14.82 in trading Wednesday on the New York Stock Exchange, but lost 92 cents in after hours trading.

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