Profitability stays out of reach for AMD

By Alun Williams

Posted on 17 Jul 2003 at 11:52

A growth in sales and reduced costs have not proved enough to get AMD back in the black, according to its latest quarterly financial report.

The company reported a net loss of $140mn for the three months ending 29 June, 2003. This is slightly less than the net loss of $146mn in the previous three months and an improvement on the $185mn reported from the same period a year ago. Sales revenue was $645mn, which represented a seven per cent year-on-year increase.

'We are pleased we lowered our operating breakeven point to below $800 million and continued to realise improvements that better position us for growth and a return to profitability,' said Robert J. Rivet, AMD's chief financial officer. 'Despite the effects of the SARS epidemic and weaker than anticipated channel sales in some of our international markets, we reduced our net loss by 24 percent and increased our gross margin as a result of year-on-year sales growth and effective cost management.'

In terms of processor sales, figures were up 7 per cent, year-on-year, to $402mn (down 14 per cent from the $468mn of the last quarter). The company reported, however, that sales to its Tier One OEM customer base were more than off-set by a decline in the desktop market. Asian and Europe saw sales fall significantly.

One continuing success is the performance of AMD's Flash memory operations - up 20 per cent, year on year, to $211mn. 'With the successful launch of a single entity that integrates Fujitsu's and AMD's Flash memory operations,' said Rivet, 'we believe we are on target to become the number one provider of Flash memory solutions and are focused on establishing Spansion Flash memory as the pre-eminent brand in the Flash memory market.'

Another bright spot has been the introduction of the Opteron, the 64-bit server processor, demand for which AMD describes as 'tremendous'. 'Our recently introduced AMD Opteron processor for servers and workstations is gaining traction in the marketplace,' said Rivet. 'We look forward to the introduction of AMD Opteron processor-based systems from IBM, Fujitsu Siemens and others in the near future. In addition, our AMD Athlon 64 processor for the desktop and mobile PC sectors remains on schedule for a September launch.'

In terms of the future, AMD's outlook is that industry conditions remain 'uncertain'. It is, however, expecting an increase in processor sales in the next three months, if only because of normal seasonal factors, but it is also anticipating increased Opteron shipments.

In the slightly longer term, AMD will be hoping for a large positive impact from its 64-bit desktop offering, the Athlon64 processor, scheduled for release at the end of September 2003 (to be precise, 23 September, it has just been officially announced). However, it will not figure in the next set of quarterly results (July-September).

See also

Intel sees flat market

AMD reports continued losses (Q1 2003)