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AMD edges past estimates

Advanced Micro Devices sees revenue pick up slightly in the second quarter to $645 million, but the chipmaker is still in the red.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
3 min read
Advanced Micro Devices saw revenue pick up slightly in the second quarter, but the company is still in the red.

Sunnyvale, Calif.-based AMD reported a net loss of $140 million, or 40 cents a share, on revenue of $645 million for the period ended June 20. In the second quarter last year, the company experienced a net loss of $185 million, or 54 cents a share, on sales of $600 million.

In the first quarter of 2003, AMD reported a net loss of $146 million, or 42 cents per share, on sales of $715 million.

The results edged past analysts' expectations, which were lowered after a warning in June. At that time, AMD said that revenue would come in at around $615 million, $100 million less than earlier expectations due partly to a slowdown in electronics buying in Asia caused by the outbreak of the severe acute respiratory syndrome, or SARS.

Sales of processors are expected to pick up in the third quarter due to the usual seasonal uptick and growing demand for its Opteron server chip. AMD shipped more Opteron chips in the second quarter, the first quarter of the chip's existence, than the company's nearest competitor shipped into the 64-bit computing market for all of 2002, said Hector Ruiz, AMD's CEO. Intel is AMD's nearest competitor and its 64-bit chip is Itanium. IBM and Fujitsu-Siemens will come out with Opteron boxes "in the near future," Ruiz said.

AMD's revenues will further be bolstered in the future by sales of its upcoming Athlon64 for desktops, which will come out Sept. 23, he said. Earlier, a document inadvertently released by AMD put the release date at Sept. 22.

Flash revenue will also increase through the integration of FASL, the former flash joint venture between AMD and Fujitsu, which has become part of AMD proper. Through the deal, AMD will likely be the largest flash manufacturer in the world in the very near future, he said.

Still, AMD has to do a find a way to sell its chips for more, a chronic problem at AMD.

"We need to do a better job of getting compensated for the performance we deliver on our products," he said. "We will leverage our Athlon64 assets to get what we deserve for our technology."

The company must also continue to race Intel in improving manufacturing technology. AMD will start to ship chips made on the 90-nanometer process--a manufacturing convention that leads to smaller, cheaper chips--toward the middle of next year, Ruiz said. Intel will start making chips on the 90-nanometer process by the end of the year.

Ruiz did not predict when AMD would return to profitability. AMD has not experienced a quarterly profit since the second quarter of 2001.

Flash memory proved to be the highlight for the company in the second quarter. Sales of flash memory came to $211 million, up 20 percent from the $175 million figure a year before, although the figure was slightly down from the $218 million in flash sales achieved in the first quarter.

The increase from the first quarter was due in part to memory integrated into high-end cell phones sold in North America and Europe, the company said.

PC processor sales came to $402 million, up 7 percent from the year before.