AMD Reeling After Ninth Straight Quarterly Loss

A year ago, Advanced Micro Devices set out to return to profitability by the third quarter of 2008 following a string of losses. New leadership, layoffs, a radical restructuring of its manufacturing assets and even significantly better products still haven't made that happen two quarters past the original deadline, as struggling AMD Thursday reported a net loss of $1.42 billion for the fourth quarter.

It was the ninth consecutive quarterly loss for Sunnyvale, Calif.-based AMD and not even the worst one in the string -- the chip maker came up $1.77 billion short in the year-ago quarter, a net-loss narrowing that put the faintest of silver linings on yet another dismal earnings report.

The positive steps AMD has taken in the past year ran into the ongoing turmoil in the global economic environment, according to chief executive Dirk Meyer.

Meyer described the just-concluded quarter's "severe inventory correction" on the part of computer makers and channel partners downstream from AMD as the primary factor in the chip maker's 33 percent revenue decline from Q4 2007. AMD expects first-quarter revenues to fall further, executives said.

AMD's larger rival and microprocessor market share leader Intel last week reported that its fourth-quarter sales were down 23 percent year-over-year. Both companies bore the brunt of the economic downturn, seeing severe softening of demand for their products in what Meyer said was "usually the strongest quarter" for microprocessor sales.

AMD's revenue fell to $1.16 billion in the most recent period against $1.74 billion in the final quarter of 2007. The company was able to narrow its net loss against Q4 2007, however, largely by reducing from $1.6 billion to $684 million what has become a regularly occurring goodwill impairment charge related to its 2006 acquisition of ATI Technologies.

Meyer said AMD's planned spin-off of its manufacturing assets would close next month pending expected shareholder approval, and made a point of dismissing reported Intel objections toward the deal over the two chip makers' x86 licensing agreement.

"We constructed that transaction consistent with all our licensing agreements. That was true then and it's true now," he said. "The deal is going to close on Feb. 10."

AMD reported it has received all the necessary approvals from the U.S. government, the SEC and other relevant authorities to create a new manufacturing property called The Foundry Company with investors from the United Arab Emirates, who will have majority ownership of the company.

Meyer also said his company's ATI graphics division had gained market share from leading discrete graphics chip maker Nvidia, and that AMD's new 45-nanometer Opteron and Phenom II chips and its utra-thin "Yukon" notebook platform were promising products looking forward.

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