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AMD posts $128 million loss
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April 14, 1999: 6:01 p.m. ET
Chip maker hurt by production problems, price war with Intel
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NEW YORK (CNNfn) - Advanced Micro Devices Wednesday reported a first-quarter loss of $128.4 million, reflecting production problems with its flagship K6 microprocessor and the ongoing price war with archrival Intel Corp.
The loss, which amounted to 88 cents a share, included a restructuring charge of $15 million. Without the charges, the company lost $113.4 million, or 81 cents a share, slightly less than the consensus estimate of a loss of 92 cents. Revenue totaled $631.6 million, up 17 percent from the year-ago quarter but down 20 percent from the fourth quarter of 1998.
"The best thing that can be said about the first quarter is that it's over," W.J. Sanders, chairman and chief executive officer, said in a statement. "The significant decline in revenues reported by AMD in the first quarter was almost entirely due to previously reported AMD-K6-2 microprocessor yield issues."
Last week, the Sunnyvale, Calif.-based chip maker warned investors it would fall short of Wall Street expectations due to lower than expected shipments of the K6 processor and a decline in prices.
AMD (AMD) shipped 4.3 million units of its K6-2 processor in the first quarter, far short of its stated goal of 5.5 million units.
However, Sanders said production yields have already started to improve.
"Improvements in production yields in March and in the current quarter to date presage a sharp increase in unit production in the current quarter," he said. "The last seven weeks' production results increase our confidence in achieving our previously stated goal of shipping 5 million units in the current quarter.
Tough year, tough industry
Semiconductor sales have come under intense pressure over the past year. According to Gartner Group's Dataquest, a market research firm, total semiconductor sales in 1998 fell 8.4 percent to $134.8 billion -- their biggest decline since 1985. And the price war to sell microprocessors destined for low-cost personal computers has been fierce.
On Tuesday, Intel Corp. (INTC) posted a 57-percent increase in first-quarter profits, but revenues were up only 18 percent, leading analysts to suggest the company may be starting to feel the effects of the price war with AMD and Cyrix.
AMD's stock closed Wednesday at 14-3/4, down 1/4.
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Advanced Micro Devices
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