Features

Profits fall 92 percent for AMD

By Brian Bergstein AP Business Writer
Friday July 13, 2001

SAN JOSE – Computer chip maker Advanced Micro Devices Inc. barely beat Wall Street’s dramatically lowered expectations for its second-quarter earnings Thursday and gave a grim outlook for the current quarter. 

In the three-month period that ended July 1, AMD had a net profit of $17.4 million, or 5 cents a share, 92 percent lower than the earnings of $207.1 million, or 60 cents a share, in the comparable period of 2000. Sales slipped 16 percent, to $985 million from $1.17 billion. 

Analysts surveyed by Thomson Financial/First Call were expecting AMD to earn 4 cents a share this quarter. 

That estimate was 27 cents a share before AMD warned last week that it was being squeezed far more than expected by the weak demand for flash memory — used in devices like digital cameras and cell phones — and a price war with Intel Corp. in the market for personal-computer microprocessors. 

Perhaps believing that AMD had no more bad news to give, investors pushed its shares up $1.58, more than 7 percent, to close at $22.70 on the New York Stock Exchange before the earnings announcement. The stock was up another 55 cents in the extending trading session. 

Sunnyvale-based AMD found encouraging signs in the second quarter, including its record sales of 7.7 million PC processors. But AMD added that “PC industry unit growth for 2001 is less than previously forecasted, and the company now believes that industry unit shipments will be approximately flat for the year.” 

With demand also weak for AMD’s flash memory products in the communications and networking sectors, the company projects that sales could decline in the current quarter between 10 and 15 percent, leading to an operating loss. A return to “solid profitablity” should come in the fourth quarter, AMD said. 

Analysts were expecting earnings of 11 cents a share in the current quarter, down from 64 cents in the same period of 2000. 

For the first six months of 2001, AMD posted a net profit of $142.2 million, or 43 cents a share, on sales of $2.17 billion. That was off from last year’s marks of $396.5 million, or $1.17 cents a share, on revenue of $2.26 billion.