AMD Misses But Loss Narrows
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AMD today reported a second-quarter loss of $0.49 per share or $330 million, missing Wall Street expectations. Revenue totaled $1.184 billion, flat compared to last quarter and down 13 percent from a year ago.
Analysts had expected a loss of $0.47 per share, with AMD's (NYSE: AMD) revenue coming in at $1.13 billion, according to Thomson Reuters.
The good news? AMD's numbers are a marked improvement from a year ago when it reported a net loss of $1.195 billion and an operating loss of $569 million.
AMD, which has been working to effect a turnaround in recent months, also saw gross margins fall to 37 percent in the second quarter after reaching 43 percent in Q1. AMD said the current results included a $98 million benefit from the sale of inventory that was written down in Q4 of 2008.
Today's results follow news of a blowout quarter by AMD rival Intel, which reported its results last week.
Intel's (NASDAQ: INTC) $8.0 billion in revenue for the quarter was a significant improvement over first-quarter sales of $7.1 billion, and ahead of projections that Intel would come in at $7.2 billion.
In a conference call with analysts today, AMD execs said the outlook for its own second half of the year also looked promising.
"With a strong flow of new products modest seasonal growth, we're positioned for stronger financial performance in the second half of the year," AMD CEO Dirk Meyer said. He also noted that next quarter would be the first AMD can report a full quarter of sales for its six-core Opteron processor, codenamed "Istanbul" -- a high-end, high-margin product introduced late last quarter.
Meyer said Istanbul is particularly well-suited for servers designed to provide cloud computing. "We think it will really break out in the second half of the year. We hope it's one of the real bright spots in the enterprise space," he said.
Catching up in netbooks?
CFO Bob Rivet noted AMD's biggest unit decline in the past quarter had been in notebooks and one analyst during today's call asked why AMD seems to be on the sidelines in the fast-growing netbook space.
AMD has not expressed an interest in pursing the netbook market, where Intel's Atom processor has a dominant presence, but Meyer seemed to indicate the company is setting its sights a bit higher -- either at low-end notebooks or what might be considered the high end of the netbook market.
"We're aggressively working on more power-efficient and lower costs for the market like those associated for netbooks," Meyer said. "We're clearly targeting devices with clearly useful keyboards and ten-inch displays."
He also said the smartphone market is not currently a focus for AMD.
Analyst Roger Kay said AMD could benefit from targeting higher-end netbooks with better profit margins.
"Everyone's trying to go upmarket slightly, and AMD is a player in the next tier above the standard netbook," Kay, an analyst with Endpoint Technologies Associates, told InternetNews.com.
Meyer also remained cautiously optimistic regarding the impact of Windows 7 due to be released on Oct. 22.
"One of the wildcards is the degree to which consumers will stall [waiting] for Windows 7 machines to show up on shelves," he said.
Meyer added that he expects Windows 7's release would be good news for AMD's ATI graphics business as customers migrate to more powerful machines and upgrade older ones.
Update adds comments by Meyer and Rivet from today's conference call.