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AMD warns of significant decline

Advanced Micro Devices warns that its first-quarter results will "decline significantly," causing its stock to drop.

Advanced Micro Devices (AMD) warned today that its first-quarter results will "decline significantly."

AMD's stock lost 1-7/16 on the news, to 21-3/8, down from yesterday's close of 22-13/16.

The company said in a filing with the Securities and Exchange Commission that it expects revenues in the first quarter of 1998 "to decline significantly, and the net loss to increase significantly as compared to the fourth quarter of 1997."

AMD reported revenues of $613 million and a net loss of $12.3 million, or 9 cents a share, during the fourth quarter.

The company said in the filing that its operating results are subject to substantial quarterly and annual fluctuations due to competition with Intel (INTC) chips; competitive pricing pressures; anticipated decreases in unit average selling prices of the company's products; production capacity levels and fluctuations in manufacturing yields; and availability and cost of products from suppliers.

About a month ago, AMD reduced chip prices in reaction to price cuts from chip giant Intel. The company since has vowed to keep its processors at 25 percent below the price of the nearest Intel equivalent.

In a separate filing, AMD said it will sell up to $1 billion in common and preferred stock as well as debt securities. The maker of microprocessors, memory products, and programmable logic products will use the proceeds of the offering for general corporate purposes, which may include the reduction of outstanding debt, working capital, acquisitions, and capital expenditures.