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AMD soars on forecast
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November 11, 1999: 5:16 p.m. ET
Chip maker now sees break-even 4Q; estimate was 36-cent per-share loss
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NEW YORK (CNNfn) - Advanced Micro Devices Inc. stock rose 20 percent after officials predicted it would break even during the fourth quarter instead of posting an expected loss.
The chip maker's chairman and chief executive W.J. Sanders made the forecast at AMD's (AMD) quarterly meeting with industry analysts in Sunnyvale, Calif.
Analysts polled by First Call has expected AMD, the world's second largest supplier of microprocessors behind Intel Corp., to post a fourth-quarter loss of 36 cents per share.
The company's stock surged 5 to close at 28 on the New York Stock Exchange.
Crediting strong sales of its new Athlon processors, first released in August to compete with Intel's (INTC) Pentium III line, and an increase in demand for its flash memory products in Asia, Sanders said AMD's fourth-quarter financial performance would be far ahead of prior expectations.
"Sales should easily exceed $800 million this quarter," Sanders said. "That would be a new record."
During the third quarter, AMD posted sales of $662.2 million and a net loss of $105.6 million, or 72 cents per share.
With the increase in sales, Sanders said AMD also will pull itself out of the red, an accomplishment that just last month seemed unlikely to many industry observers, as well as the company itself.
"At the beginning of the quarter, our internal goal of achieving operational break-even admittedly was a tough goal," Sanders said. "But now, barring some unforeseen new disruptions, we believe our break-even goal is attainable."
Sales of Athlon processors have exceeded the company's expectations, according to Sanders. He said AMD had shipped roughly 200,000 Athlons during the third quarter, and that the company's goal of shipping 1 million of the chips by year's end "seems increasingly realistic."
AMD's prior guidance that it would ship 5 million microprocessor units total in the fourth quarter now appears to be conservative, Sanders said.
The company also plans to unveil an 800-Mhz version of the processor during the first quarter of next year.
AMD's second largest business line, flash memory, also is gaining momentum, with stronger demand in Asia propelling that division to 20 percent growth from the third quarter and roughly 35 percent year to year, Sanders said.
Flash memory chips, which maintain data even after the devices they are used in are powered off, are used extensively in portable communications and computing products such as Palm Pilots.
"We're sold out on flash and are expecting to end the year on a $1 billion annualized run rate," Sanders said.
Thursday's comments came as a surprise to many industry observers, some of whom were uncertain about AMD's reliance on the Athlon for its future growth.
And just 10 days ago, the company filed documents with the U.S. Securities and Exchange Commission suggesting it might take a fourth-quarter restructuring charge to bring its costs in line with its expected revenue growth rates.
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Advanced Micro Devices
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