AMD beats estimates on strong sales
The chipmaker posts another record for processor shipments--a milestone that lets the company beat analysts' financial expectations for the first quarter.
For the quarter, AMD reported a net loss of $9.2 million, or 3 cents per share, on revenues of $902 million. A consensus of analysts expected the company to report a loss of 6 cents a share.
Overall, revenue and income were down substantially from the same period a year ago, when Sunnyvale, Calif.-based AMD gained a substantial amount of market share from Intel. Last year, the company reported a net gain of $124.8 million, or 37 cents a share, on revenue of $1.2 billion for the first quarter.
Still, AMD's current numbers show that the PC market is gaining some of its strength after a disastrous slide that began in August 2000. The company shipped a record eight million Athlon and Duron processors in the quarter, slightly more than in the fourth quarter. PC processor revenue came to $684 million, 3 percent more than the $661 million seen in the first quarter of 2002.
Although unit processor shipments went up, PC processor revenue slid 3 percent from the fourth quarter, but PC sales generally slip around 5 percent from the fourth to the first quarter anyway, according to analyst estimates.
Intel reported a 13 percent rise year to year in processor revenue on Tuesday and said it maintained market share. Intel also said that its average selling price for microprocessors went up from the fourth quarter to the first, while mathematically it appears AMD's dropped slightly. AMD, however, claimed it gained 1 percent of market share when Xbox and other factors are excluded.
AMD Chief Executive Jerry Sanders cautioned investors against being too optimistic. Further market-share gains will be tough until there is a larger, general upswing in the economy, he said. The company also lags behind Intel in India and China and has made little headway in landing a deal with Dell Computer, the only major PC maker gaining market share. In other words, AMD will chip away at Intel, but dramatic reversals aren't on the horizon yet.
"Our processor business is enduring a PC slump. Our overall business is unlikely to show improvement," Sanders said.
The downside for AMD came in flash memory, which is bought by communications companies. Memory revenues declined to $160 million, down from $411 in the first quarter the year before.
Nonetheless, revenue will drop to around $820 million to $900 million in the second quarter because of the weakness in flash memory and the ordinary seasonal drop in PC sales, the company said.
On the positive side, the second half looks promising, AMD executives said. The company will begin to ship its MirrorBit flash memory in the second half of the year. MirrorBit can store twice as much data as standard memory, but without additional cost.
Meanwhile, ClawHammer, a new desktop chip, will likely come out at the end of the year and run at 2GHz or more, while SledgeHammer, a version for servers, will hit in early 2003.
In the past, AMD said it planned to return to profitability in the second half of 2002.