AMD Shares Rise on Cost Cutting Plans
Chipmaker Advanced Micro Devices said it expects to report first-quarter revenue of about $1.23 billion, well below Wall Street forecasts, and it announced a restructuring to cut costs.
AMD's shares gained in early trading . Larger rival Intel was also up .
The No. 2 microprocessor manufacturer said it plans to reduce 2007 capital expenditures by about $500 million, and that the cost cuts would not materially hurt capacity plans for the year. AMD also pledged to reduce discretionary expenses and limit hiring to critical positions.
AMD had warned investors early in March that it would miss its quarterly revenue target as it loses market share among computer resellers. At the time, it said revenue would fall short of a $1.6 billion to $1.7 billion goal outlined at the start of the year, but gave no precise estimates.
It was the second quarter in a row that AMD showed signs of trouble in a bruising price war with Intel that has eroded profits for both companies in the $30 billion processor industry.
AMD said on Monday that revenue for its computing solutions business declined sharply quarter-over-quarter, with a drop in prices and significantly lower unit sales. Its resale channel
was particularly affected.
Analysts on average had expected AMD to report revenue of $1.54 billion, according to Reuters Estimates. The company is due to report financial results on April 19 and said it would provide more details of its overhaul at that time.