AMD Posts Quarterly Loss Below Estimates as Chip Sales Slump
Advanced Micro Devices announced first-quarter results that badly missed consensus estimates as the company reported lower shipments of chip products in addition to falling average prices.
The semiconductor company reported a quarterly loss of 90 cents a share on revenue of $1.23 billion. AMD was expected to post a loss of 48 cents a share on revenue of $1.26 billion, according to analysts surveyed by Thomson Financial.
"Our first quarter performance is disappointing and unacceptable," Chief Financial Officer Robert Rivet said in a release. "We are aggressively addressing the issues that led to our significant revenue decline."
The company cut sales guidance twice during the quarter, saying in January that it expected sales in a range of $1.6 to $1.7 billion, and later revised that forecast down to $1.22 billion on April 9.
AMD also said it expected second-quarter sales to be flat to slightly up from the first quarter, which tracks below Wall Street's $1.31 billion estimate.
"It looks even worse than we thought," Eric Ross, an analyst with ThinkEquity Partners, told CNBC. "Intel was able to crush them with price last year and came out with equivalent products."
Larger rival Intel , with cash reserves about ten times that of AMD, has been able to endure an aggressive pricing war that has steadily eroded AMD's sales, average selling prices and gross margins.
AMD said its adjusted gross margin was 31%, compared to 40% in the previous quarter and 59% a year earlier.
"At best, this is dead money," Ross said. "This is a bruising price war that is going to continue. I would rather be in other names."
AMD also said the integration of graphics chipmaker ATI Technologies, which it acquired last October, contributed to a decline in gross margins.
Shares fell 9% in after-hours trading after closing the regular session up 2.7%. AMD shares have dropped 55% over the past year, compared to gains of 11% for Intel.