AMD tops 2Q estimates

At least Advanced Micro Devices Inc. (NYSE: AMD) didn't lose as much money as Wall Street had anticipated, but the company doesn't see further market share gains.

In second quarter results released after market close Wednesday, the maker of PC chips posted a net loss of $162 million, or $1.10 a share. First Call's survey of 16 analysts predicted a loss of $1.26 a share for the quarter ended June 27.

Second quarter sales fell 6 percent sequentially, and 13 percent year-over-year, to $595.1 million. AMD had previously warned that sales would fall because of lower unit shipments; the company shipped 3.7 million AMD K-6 processors in the second quarter, down from 4.3 million in the first three months of the year.

In a separate announcement, AMD announced the resignation of S. Atiq Raza as president, chief operating officer and chief technical officer. Raza cited personal reasons for his departure, and said he is talking to AMD about another position with the company.

The average selling price for K-6 chips dropped to $67 from $78 in the first quarter. Non-microprocessor sales gained 16 percent, led by flash memory chips for cell phones.

Intel's push of its Celeron chips for cheap PCs has blunted AMD's previously strong market share momentum, said W.J. Sanders III, CEO and co-founder of AMD. "In the face of Intel's intensifying aggression in the consumer sector of the PC market ... further gains in unit market share or revenue growth are unlikely," he said.

AMD is counting on its Athlon processor, which is reportedly faster than comparable Intel offerings, to boost margins. Athlon began shipping in June. "We are encouraged by early customer reaction," Sanders said.

Shares of AMD gained 15/16 to 18 in Wednesday's trading ahead of the quarterly report. Of 24 analysts surveyed by Zack's Investment Research, 22 rate AMD the equivalent of a "hold", one recommends it as a "strong buy", and one has a "strong sell" rating on the stock.>