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AMD misses fourth quarter target

Advanced Micro Devices (NYSE: AMD) missed analyst estimates for fourth quarter earnings.

After the close of regular trading Wednesday, the chipmaker reported fourth quarter net income of $177.9 million, or 53 cents per share. Analysts polled by research firm First Call had predicted a profit of 55 cents per share for AMD's December quarter.

Sales for the quarter were $1.17 billion, a bit below projections, but up from $968.7 million a year ago.

Shares of AMD traded at $18.88 in after-hours activity on the Island ECN, immediately following the release of quarterly results. AMD stock rose 8 percent to $18.50 in Wednesday's regular trading, ahead of the earnings report.

Looking forward, the company said it plans to sell between 6 million and 6.5 million PC processors in the first quarter with PC processor revenues to be "modestly lower." The company expects that unit growth for the PC market will be in the mid-teens for 2001 as a whole.

AMD said it expects that first quarter sales will be flat sequentially. Noting forecasts for semiconductor industry growth to be about 7 percent to 15 percent for 2001, AMD said its full year sales will be at the high end of those forecasts.

"Aggregate growth in the range of 15 percent in this environment would result in net income of $2 per diluted share," the company said.

Those results would be in line with First Call estimates calling for a profit of $2.02 for 2001.

Analyst estimates were cut last month after the company warned it would not meet its original fourth-quarter targets, because of the widely-reported slowdown in PC sales growth. Wednesday's numbers are in line with AMD's revised earnings prediction of 50 to 60 cents a share.

AMD had, by all accounts, a great year in 2000. It maintained a consistent lead over Intel in the chip speed race and made inroads into the performance segment of the PC market. Financially, it strung together a series of good quarters, selling out chip inventories and recording its first annual profit since 1995.

But the company hit a wall in the fourth quarter, amid a sagging PC market sparked by a slowing economy and individual troubles such as a shortage of compatible chipsets, scrapped plans for a server processor and delayed notebook chips.

The chipmaker also announced on Wednesday that handheld computer maker Palm signed on to make AMD its primary provider of flash memory through 2003. >