RealTime IT News

AMD Warns of Lower Q4 Profit

AMD  said income for the fourth quarter will be lower than expected because of lower processor selling prices in its competition with Intel .

AMD said Q4 operating income, excluding segments of and charges related to its purchase of ATI, is expected to be positive but substantially lower than in the third quarter.

The chipmaker said in a statement gross margin and operating income were impacted by "significantly lower microprocessor average selling prices," offsetting an increase in unit sales.

AMD said Q4 revenue, excluding ATI-related segments, is expected to increase roughly 3 percent from the $1.33 billion reported in the Q3 2006.

AMD will report Q4 results after market close on Jan. 23.

AMD shares were trading down $1.75 to $18.43 Friday morning on the news.

The news is reflective of the hot contest between No. 1 chipmaker Intel and AMD, which made some inroads into Intel's server market share with the introduction of its Opteron chips four years ago.

Among other perks, Opteron processors feature cache controllers built directly into the chip, an architecture that has impressed server makers because it reduces latency and eliminates the need for a separate chip.

With Intel rallying in recent quarters, AMD last year purchased ATI, a leading maker of graphics processors, which are becoming increasingly vital for next-generation gaming.

AMD is combining its Opteron chips with ATI processors under a brand called Fusion. Intel has said it will step up its graphics integration in 2007.