AMD Posts a Big Drop in Profit

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Earnings Analysis:

Author: 123jump.com Staff
123jump.com
Last Update: 1:55 PM EST January 21 2008

AMD’s revenue for the quarter remained almost unchanged at $1.77 billion. On a non-GAAP basis, the company''s loss per share was 17 cents. Excluding one-time charges, net loss would have come in at $97 million. Computer microprocessor revenue climbed 9% sequentially, while the graphics chip business grew by 3%. The management didn’t give much detail concerning its outlook and only said it expects first-quarter revenue to decrease in line with seasonality.

[R]1:00PM New York - Advanced Micro Devices Inc. (AMD: chart) posts $1.77 billion loss; stock price gains 11%.[/R]

Revenue Review

Advanced Micro Devices Inc. reported fourth quarter revenue rose 8% to $1.77 billion compared with $1.63 billion reported in the year-ago quarter.

For fiscal 2007, AMD said revenues climbed 6% to $6 billion from $5.6 billion in 2006.

Earnings Review

In the quarter, the chipmaker net loss widened to $1.772 billion from $396 million a year earlier, although the figures indicate a return to profitability.

For fiscal 2007, the company posted a loss of $3.37 billion or $6.06 per share from a loss of $166 million or 34 cents per share in the year ago period.

Earnings per Share Review

AMD said that for the latest three months it posted a loss of $3.06 per share, down from a loss of 71 cents per share in the comparative period in 2006.

The company, the world number two-chip maker after Intel Corporation took a charge of $1.67 billion or $2.89 included in the loss.

Excluding these items, AMD posted a loss of 17 cents per share, better than estimated loss of 36 cents per share, according to analysts surveyed by Thomson Financial.

Quarterly gross margins climbed to 44% from 41% in the third quarter of 2007 and 36% in the fourth quarter of 2006, thanks to increased shipments of new products and higher average selling prices.

In the quarter, AMD shipped higher margin microprocessors, including 400,000 quad-core processors.

Segment Review

Revenue from the Computing Solutions sequentially gained 9% to $1.4 billion while in the Graphics division revenues at $259 million, up 3% from the third quarter. Consumer Electronics revenues increased 12% to $109 million.

AMD received net investment proceeds of $608 million from a wholly-owned subsidiary of Mubadala Development Company, an investment and development company headquartered in the United Arab Emirates.

Business Review

During the quarter, AMD launched its new desktop platform, “Spider.” Spider combines AMD Phenom quad-core processors, ATI Radeon HD 3800 series graphics processors and the AMD 7-Series chipset.

Toshiba launched its first AMD-based business notebooks, the Satellite Pro A210 Series, and expanded its AMD-based consumer notebook offerings.

Earlier last week, AMD’s competitor Intel Corporation (INTC: chart) reported record fourth-quarter revenue at $10.7 billion but issued a disappointing outlook for the first quarter, fueling fears of a slowdown in spending on computers.

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