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Thursday, April 14, 2005
 AMD posts first-quarter loss, but better than expected sales
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Message Text: AMD posted a first-quarter loss Wednesday amid continuing soft demand for flash memory used in cell phones. But microprocessor sales set a company record.

AMD also said its flash memory subsidiary, Spansion LLC, has filed paperwork for an initial public offering, though it did not specify the date or the price of the stock. The division is 60 percent owned by AMD, with the remainder held by Fujitsu.

For the period ended March 27, AMD lost $17.4 million, or 4 cents per share, compared with a profit of $45.1 million, or 12 cents per share, in the same period last year. Sales fell less than 1 percent, to $1.23 billion from $1.24 billion.

Analysts were expecting the Sunnyvale, California-based company to earn 2 cents per share on sales of $1.21 billion, according to a survey by Thomson First Call.

"Our microprocessor business delivered record sales in what is typically a seasonally down quarter, driven by increased sales across all product categories," said Robert J. Rivet, AMD's chief financial officer.

Though much smaller than Intel Corp., AMD was the first to market with a line of processors that are compatible with applications that ran on previous generations of processors and capable of handling much more memory than most of today's chips. AMD launched its 64-bit Opteron chips in 2003; Intel caught up earlier this year.

Today, Intel and AMD are in a tight race to formally launch the first microprocessors that feature two computing engines on a single chip instead of just one. AMD is expected to target servers at first while Intel is going after desktops and laptops.

The companies also compete in flash memory used to store information in cell phones. Both have described the market as weak, but AMD is taking a bigger hit because flash chips make up a much greater percentage of sales than they do at Intel.

In a statement Wednesday, Rivet said the flash market continued "to experience industrywide oversupply and strong pricing pressure."

"We experienced a rise in unit shipments, but our average selling price declined significantly, resulting in weaker than expected sales," he said.
 
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