AMD Profit Drops 65% but Tops Forecasts
Advanced Micro Devices Inc.’s second-quarter profit on Wednesday fell 65% but beat Wall Street expectations as the chip maker reported record microprocessor sales.
AMD said processor sales rose 38% from a year earlier, while revenue at its division that makes flash memory for cellular phones and other devices slumped 31%. AMD plans to spin off the flash memory business in a public offering.
For the period ended June 26, AMD earned $11.3 million, or 3 cents a share, on sales of $1.26 billion. That’s down from a profit of $32.2 million, or 9 cents, on sales of $1.26 billion in the same period last year.
Analysts were expecting the maker of Athlon and Opteron processors to lose 5 cents a share on sales of $1.22 billion, according to a survey by Thomson First Call.
AMD shares, down 12 cents to $19.25 in regular trading, rose to $19.80 after hours.
The company had been eclipsed by Intel Corp. until recent years when the smaller company released a series of chips that, by many accounts, surpassed the offerings of its much larger rival. Still, AMD’s market share in terms of revenue has stayed flat while Intel’s stands at 90%
On June 27, AMD filed suit against Intel, claiming that the world’s largest chip maker is a monopoly that bullies computer makers into not buying AMD processors with a combination of financial incentives and threats that those incentives might disappear. Intel has denied that its business practices violate antitrust laws.
In the lawsuit, media statements and advertising, AMD claims it offers superior technology that should have a larger share of the market if not for Intel’s actions.
But the suit could backfire on AMD as it attempts to collect evidence from companies with which it does -- or hopes to do -- business. In one filing, it reported that just one company, retailer Best Buy, had agreed to comply with requests for information without limitation.
In an interview Tuesday, AMD Chief Administrative Officer Tom McCoy downplayed the possibility that the lawsuit could harm business. “We are not going to be apologetic about shining the light on Intel’s business practices, which are harming the entire industry,” he said.
Intel and AMD also compete in flash memory. Both have acknowledged weakness in the market, though AMD has taken a much bigger hit because the chips make up a greater percentage of its revenue.
For the first half, AMD lost $6.1 million, or 2 cents a share, compared with a profit of $77.3 million, or 21 cents, a year earlier. Revenue fell to $2.49 billion from $2.50 billion in the same period.
