Advance Micro Profit Falls As Expected

Advanced Micro Devices Inc. said second-quarter earnings plunged 92% to $17.4 million, or 5 cents a share, as the company was hit by flagging personal computer sales and fierce competition. Sales declined 16% to $985.3 million.

The company also said it expects to break even in the third quarter, contrasted with analyst expectations of an 11-cent profit, but said it sees a return to “solid profitability” in the fourth quarter.

Analysts had slashed their second-quarter estimates to 4 cents from 27 cents based on the company’s guidance last month.

Demand for flash memory chips, used in cellular telephones, remains poor because of weakness in the communications and networking industries, AMD said.

The Sunnyvale, Calif.-based company said it plans to cut capital spending in 2001 to $900 million from $1 billion set earlier.

The company is counting on a pickup in demand for PCs and laptops during the back-to-school season and holidays for better revenue in the second half, despite declining prices for its microprocessors.

Shares of AMD gained $1.58 to close at $22.70 on the NYSE before the results were announced.