Same old story: AMD issues another warning

It just wouldn't be right to have a quarter in which Advanced Micro Devices Inc. (NYSE: AMD) didn't issue a profit warning. Sure enough, the chipmaker said Wednesday it will lose about $200 million in its second quarter.

Wednesday's announcement is just the latest in a long line of disappointments for the company.

CEO Jerry Sanders told analysts that total sales in the quarter will fall below $600 million.

Last quarter, AMD issued three profit warnings ahead of its first-quarter results before checking in with a loss of $128.4 million, or 81 cents a share, on sales of $631.6 million.

More disturbing, that $631.6 million in sales marked a 20 percent decline from the $788.8 million in sales it recorded in the fourth quarter.

AMD shares closed off 1 1/16 to 18 3/16.

In a prepared release, AMD said it "expects that average selling prices and unit shipments will fall substantially below earlier expectations for the second quarter."

It also said it was "unlikely" to sell more than 3.7 million units, despite the increased production of its K6 microprocessors. Heavy "gray market" activity worldwide, which has only recently subsided, makes it unlikely that the company will get the sell-through needed to achieve unit sales growth.

"The company was unable to retake market share at those customers whose needs AMD did not satisfy during the production-limited first quarter when shipments were prioritized to AMD strategic partners," the company said in the release.

What makes this latest meltdown all the more vexing is reports that the worldwide chip market will grow by between 12 percent to 15 percent this year.

Apparently AMD can't even get its act together when things are looking up.

"We currently expect total revenues for the quarter will be less than $600 million," Sanders said in the release. "While (the $200 million loss) will be offset by the more than $400 million pretax gain on the recently concluded sale of Vantis, our programmable logic subsidiary, these operating results are a bitter disappointment to all AMDers."

First Call consensus was expecting a loss in the second quarter, but not one of this magnitude. Analysts had predicted a loss of 40 cents a share in the quarter.

Even as AMD was announcing another trip into the red, the chipmaker came out with some good news. It has started shipping its next-generation AMD Athlon processor to computer manufacturers.

Formerly code-named the AMD-K7, the chip is initially available in speeds of 600, 550, and 500 MHz.

The company said the Athlon is the fastest PC processor now avaiable, outperforming Intel Pentium models.

AMD shares peaked at 33 in December before falling to a 52-week high of 12 3/4 in August.

Of the 24 analysts brave enough to follow the stock, 22 rate it a "hold."