AMD narrows net loss in second quarter

AMD on the road to profitability, new products announced

AMD headquarters; Sunnyvale, California.

AMD headquarters; Sunnyvale, California.

Advanced Micro Devices narrowed its net loss during the second quarter of 2009 as it slowly inched its way toward profitability after consecutive quarterly losses, the company said Tuesday.

AMD reported a net loss of US$330 million, or $0.49 per share, during the quarter that ended on June 27. That compares to a net loss of $1.195 billion a year ago and a net loss of $416 million in the first quarter of 2009.

Financial analysts polled by Thomson Reuters expected a net loss of $0.47 per share.

In an effort to reach profitability, AMD in the first quarter spun off its manufacturing assets into a separate company called GlobalFoundries, which unloaded close to $1.1 billion in debt from AMD's books. GlobalFoundries is a joint venture with investment firm Advanced Technology Investment Company, which is owned by the Abu Dhabi government.

The company reported revenue for the second quarter of 2009 of $1.184 billion, which decreased 13 percent compared to the second quarter of 2008 and was flat compared to $1.177 billion during the first quarter of 2009. Revenue beat analyst expectations of $1.13 billion.

AMD successfully met its product plans during the first half of the year and hopes to release new products as it moves toward profitability, said CEO Dirk Meyer in a statement. He specifically mentioned new platform, microprocessor and graphics products that the company plans to release in the second half of the year.

Though the company's revenue exceeded expectations, underutilization of factories and dropping PC prices, led by laptops, affected the company's margins, Meyer said during a conference call. Pricing pressure on low-end graphics cards also reduced margins.

Margins were also affected by aging chips made using the 65-nanometer process, which dominated AMD's shipments, Meyer said. Although AMD no longer owns its manufacturing facilities, it is responsible for some of GlobalFoundries' manufacturing costs.

The company wants to clear off its remaining 65-nm inventory and quickly turn to the newer 45-nm manufacturing process, which produces faster and more power-efficient chips at a lower cost. Meyer said 45-nm chips will make up a larger percentage of shipments in the second half of this year, which could drive up margins by cutting manufacturing costs.

AMD hopes to reduce its exposure to GlobalFoundries' manufacturing costs over time as GlobalFoundries gains more customers and establishes its own identity. AMD is still the only customer for GlobalFoundries, which is set to announce its first non-AMD customer in the next 30 days.

One promising product for upcoming quarters is the six-core Istanbul chip, which was released on June 1. Istanbul chips are designed for cloud computing installations, which Meyer expects to be one of the bright spots in the struggling enterprise market.

Many lightweight laptops with AMD's low-power Athlon Neo chips are due in the third quarter. AMD also plans to launch the Tigris platform for mainstream laptops in the second half of the year.

Meyer said it was hard to predict whether Windows 7 would be a big driver of chip demand in the near term. It might provide an opportunity to sell more expensive systems with separate graphics cards, he said.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?