ATI Write-Down Costs AMD $1.68 Billion
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Well, no one can say AMD didn't warn of impending pain from the write-down of assets related to the ATI acquisition.
It just didn't tell us how bad the pain would be.
For the quarter ended Dec. 29, the company posted a net loss of $1.77 billion. That sum includes the approximately $1.68 billion ATI write-down, as well as the write-down of its share in Spansion, a flash memory joint venture with Fujitsu.
The shame of it all is that excluding the ATI charge, AMD would have had its best quarter in some time.
In terms of operating loss -- which doesn't include taxes and other one-time charges -- AMD's loss would have been a mere $9 million. After the ATI write-down, Spansion, taxes and interest income and expense, the company saw a quarterly net loss of $1.77 billion. Excluding the total ATI costs, AMD would have posted a slim loss of $97 million. A year earlier, it posted a $576 million quarterly loss.
For fourth quarter 2007, AMD also reported revenue of approximately $1.77 billion -- essentially even with the $1.77 billion it reported in the fourth quarter of 2006.
For the year, AMD saw revenue of $6.013 billion, a 6 percent improvement over the $5.649 billion it reported in 2006.
The net loss for fourth quarter made up half of the year's losses of $3.77 billion -- far worse than the $166 million loss AMD saw during its 2006.
The one consolation for AMD is that the ATI write-down, while a diminishing of its assets on the balance sheet, does not impact cash flow. In fact, the company ended the year with $1.889 billion in cash on hand, up from $1.541 billion in cash last year.
That sum is largely attributable to a $622 million investment from a UAE firm late last year.
On the conference call with analysts to discuss the results, CFO Bob Rivet pointed out that the company had seen record unit shipments in desktop, server and notebook processors. Those included 400,000 quad-core desktop and server shipments, which was consistent with guidance given earlier in the year.
Rivet's forward guidance was modest. He said only that the first quarter of 2008 would see a decrease in revenue "in line with seasonality," and that operating expenses would be up about 5 percent.
The company undertook a few cost-cutting measures -- such as a forced shutdown at the end of the year -- which Rivet also said would not be repeated this year.
CEO Hector Ruiz said there would be no change in any of the information and projections given last month during AMD's New York analysts meeting.
"We were determined to fix Barcelona quad-core issues as soon as we could," he said. "I'm very pleased to report silicon has been out of the factory with the fixes that we've put in place and we're really thrilled with all of the work that's been done. We expect within two to three weeks we will begin providing our customers the samples that they will then put in servers platforms beginning at the end of the quarter."
The priority for first quarter is getting the triple-core and low-power Phenoms to market, which AMD recently moved to the head of the line.
When asked about the current worries of an economic slowdown that many companies are factoring into their guidance, Ruiz appeared optimistic.
"I have to say we are in a unique segment of the market, the microprocessor market, where the need to drive the economic engines of growth in all the segments of the world ... are in such a need of infrastructure growth and economic growth that even if those markets slow down from 10 percent to eight percent growth, we're still talking about a significantly strong and healthy growth," he said.