AMD's $1.4 billion loss bigger than expected

Advanced Micro Devices announces its ninth consecutive quarterly loss. The chipmaker, like Intel and TSMC, has seen a precipitous drop in orders from customers.

Updated at 6:15 p.m. PST with AMD statement about a letter it received from Intel on January 20.

Advanced Micro Devices on Thursday reported a bigger-than-expected net loss of $1.4 billion for the fourth quarter of 2008. This is the chipmaker's ninth consecutive quarterly loss.

AMD also disclosed that it received a letter from Intel regarding the two companies' patent cross-licensing agreement.

The $1.42 billion loss, or $2.34 per share, was below the $1.77 billion loss, or $3.06 per share, reported a year ago but worse than Wall Street analysts had expected

Excluding one-time charges, AMD lost 69 cents per share, larger than the loss of 54 cents per share predicted by analysts.

AMD, like Intel and TSMC, has seen a precipitous drop in orders from customers.

Fourth-quarter 2008 revenue came in at $1.162 billion, down 35 percent compared to the third quarter of 2008 and 33 percent compared with the fourth quarter of 2007. Fourth-quarter 2008 revenue was down 28 percent sequentially, excluding third-quarter 2008 process technology license revenue of $191 million, AMD said.

For the year ended December 27, 2008, AMD had revenue of $5.808 billion, while the fiscal 2008 net loss was $3.098 billion. This compares with revenue of $5.858 billion and a net loss of $3.379 billion for fiscal 2007.

AMD provided little future guidance. "In light of the current macroeconomic conditions, very limited visibility and continued corrections in the supply chain, AMD expects first quarter 2009 revenue to decrease from the fourth quarter 2008."

Chief financial officer Bob Rivet said during the earnings conference call Thursday that "factory utilization will be crummy, considering the demand environment." This sentiment echoes what Intel said last week about abysmal factory utilization due to sinking demand from customers. And clear evidence of this trend was provided Wednesday when Intel said it would close five plants .

AMD had warned in December that fourth-quarter revenue would be significantly lower than previously expected.

AMD's stock has been trading around $2 and has lost more than 50 percent of its value since the end of September when the stock was trading above $5.

AMD receives letter from Intel

AMD also disclosed on Thrusday in an 8-K filing with the Securities and Exchange Commission that it received a letter from Intel relating to the patent cross license agreement between the two companies. The agreement covers the x86 instruction set architecture that the companies use in their processors.

An excerpt from the AMD statement in the 8-K filing is as follows: "On January 20, 2009 the Company received a letter from Intel Corporation relating to the 1976 and 2001 Patent Cross License Agreement between the Company and Intel (the 'Cross-Licenses'). In the letter, Intel requests a meeting with the Company to discuss whether The Foundry Company qualifies as a licensed 'Subsidiary' under the Cross-Licenses, whether the creation of The Foundry Company is a breach of the provisions of one of the Cross-Licenses and whether either the transaction establishing The Foundry Company or the Company's 2006 acquisition of ATI constituted a change of control of the Company under the Cross-Licenses."

The Foundry Company is the chip manufacturing operation that AMD is in the process of spinning off.

AMD said it "strongly believes that The Foundry Company qualifies as a 'Subsidiary' under the Cross-Licenses, that the creation of The Foundry Company is not a breach of the provisions of either of the Cross-Licenses and that neither the transaction establishing The Foundry Company nor the Company's acquisition of ATI constituted a change of control of the Company under the Cross-Licenses."

About the author

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

 

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