AMD reported fourth quarter earnings today that reflected continued unit sales gains but also increasing price pressure from its competition with Intel. AMD’s shares dropped 4 percent after it released earnings this afternoon.
The revenue figures were complicated by the inclusion of revenue related to its $5.4 billion dollar acquisition of graphics chipmaker ATI last year that was finalized on October 25.
For the fourth quarter, AMD reported revenue $1.77 billion and a net loss of $574 million, or $1.08 per share. The results include $550 million in what AMD said were integration and acquisition-related charges as well as $27 million in employee stock-based compensation expenses.
Excluding those charges, AMD said its fourth quarter revenue was $1.37 billion, with operating income of $63 million. For the fourth quarter in 2005, AMD reported $1.35 billion in revenue and a much better operating income of $272 million.
Still, taking the long view, AMD officials said they believe they gained market share in the most recent quarter and are bullish on what it said are the performance efficiency advantages of the “Barcelona” quad-core processor for servers it plans to ship this summer.
Intel beat AMD to the punch by shipping its own quad-core offering, “Clovertown,” last November.
Even as unit sales increased though, AMD’s 40 percent gross margin was significantly less than the 54 percent it recorded for the same quarter a year ago. AMD’s unit shipments increased 26 percent year over year and 85 percent in the mobile segment.
“We’re not satisfied with our results in the fourth quarter, but it was a strategic success,” AMD president Dirk Meyer said in a conference call with analysts.
CEO Hector Ruiz said he is “very bullish” on the prospects for Microsoft’s new Vista operating system to boost computer sales, but he said uncertainty in the consumer market makes it unclear whether to expect a big up tick in sales this quarter.
While Ruiz reminded analysts that AMD led the way in introducing x86-compatible, dual-core processors for servers, he appeared to tweak Intel for going overboard in its multi-core plans.
“It’s about more than cores,” said Ruiz, who didn’t mention Intel by name. “Some claim 64- to 128-cores is the future of the industry. I think they will find their way to the pantheon where 10 GHz lies.” Several years ago, Intel abandoned a 10 GHz Pentium chip project because of overheating concerns.
