AMD to preview key third quarter
By Mike Tarsala, CBS.MarketWatch.com
Last Update: 2:07 PM ET July 12, 2001
SUNNYVALE, Calif. (CBS.MW) -- Since Advanced Micro Devices already spelled out its expected second-quarter results, investors will be more interested in hearing word of third-quarter sales on Thursday, when the company reports results after the market close.
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AMD already knows it's fallen well short of sales and profit goals. The company said last week that it expects to report second-quarter earnings of 3 to 5 cents a share, or as low as $10.2 million, vs. previous expectations of 27 cents a share, or about $92 million.
"We faced competitive pressures in a very difficult microprocessor business," said John Greenagel, spokesman for AMD.
The company may try to put its best spin on the current quarter, the key back-to-school sales period for the computer makers that use AMD's chips, according to one analyst. But the company is expected to acknowledge that problems with eroding profit margins that wrecked the second quarter are likely to continue.
"They tend to be very bullish all the time, so they're going to talk about a bit of a pickup in personal computer-related sales," said Tim Mahon, analyst with Credit Suisse First Boston. "But they'll have to talk about a continued harsh pricing environment."
The chipmaker is expected to report sales of $986 million in revenue for the third quarter, down 18 percent from the same period a year ago, reports CS First Boston. AMD is expected to report third-quarter earnings of 4 cents a share, down more than 90 percent from $1.18 a share in the year-ago period.
AMD, (AMD: news, msgs, alerts) the world's No. 2 microprocesssor maker behind Intel, blamed price cuts as part of the reason for second-quarter earnings that it said will be less than 20 percent of expectations.
These pressures came almost solely from Intel, which consistently cut microprocessor prices on its Pentium III and Pentium IV chips in recent weeks. AMD, in turn, was forced to cut prices on its competing Duron and Athlon processors.
Douglas Lee, analyst with Banc of America Securities, estimated that AMD's average microprocessor selling price fell to the low $80 range, compared with $91 in the first quarter.
AMD already said that sales for the second quarter ended July 1 were down about 16 percent from the year-ago period to $985 million, short of the consensus expectation of $1.08 billion as compiled by First Call/Thomson Financial.
But AMD already announced it had record PC-processor unit sales in the quarter, despite the shortfall.
The company also is expected to report second-quarter weakness in flash memory chips, the processors used in laptop computers and other portable electronics that rely on battery power.
AMD's revenue, which is projected to be 9 percent below expectations, may have been affected in part by overall weakness in the personal-computer-chip market. The U.S. PC market will see a decline in the number of computers shipped for the first time ever this year, according to a forecast from International Data Corp. |
