AMD earnings slump below expectations
Advanced Micro Devices, Inc. yesterday reported earnings that fell sharply below analysts' estimates and blamed the numbers on weak flash memory and programmable logic device revenues and high costs from its K6 launch. For the second quarter ended June 29, AMD posted sales of $594.6 million, a 31% increase over the same period last year and an 8% increase over this year's first quarter, officials said. More than $100 million in sales of the K6, AMD's MMX-enhanced, Windows-compatible processor, helped boost revenue, officials said. Net income during the quarter was roughly $10 million, or 7 cents per share, officials said. That was an improvement over the same period last year, but results fell sharply below analysts' expectations of 22 cents per share, according to First Call Corp., a Boston-based investment research firm that compiled estimates from 23 brokers. In the same period last year, AMD posted a loss of $34.7 million, or 26 cents per share. Despite strong K6 sales, AMD had expected earnings to lag somewhat, given costs associated with ramping up K6 production, marketing and advertising, said AMD spokesman Scott Allen. However, AMD's weaker performance in flash memory and in its Vantis programmable logic business unit came as more of a surprise, Allen said. Flash memory unit sales actually rose, but competitive price cuts led to a drop in revenue, he said. The company also expected slower sales from its older K5 chip. In the first six months of this year, AMD posted revenue of $1.1 billion and net income of $22.9 million. During the first two quarters last year, AMD's revenue was $999.3 million, and its net loss was $9.3 million, or 7 cents per share. For the third quarter, AMD expects to see a sharp increase in K6 sales, up from 350,000 in the second quarter to 1 million to 2 million units, Allen said. It is expecting only nominal growth in its nonmicroprocessor business units, however, because the third quarter is traditionally slow for those products.
by Sari Kalin |
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