Tenchusatsu - Re: "When did our buddy Jerry Sanders say that AMD
is demand limited?"
Right here - look for the highlighted section.
Paul
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Tuesday October 6, 10:54 pm Eastern Time
FOCUS - Advanced Micro reports surprise profit
(Adds analysts' comments)
By Therese Poletti
SAN FRANCISCO, Oct 6 (Reuters) - Advanced Micro Devices Inc. (NYSE:AMD - news), a maker of Intel-compatible microprocessors, reported an unexpected profit in its third quarter, buoyed by strong sales of
its latest version of its K6 processor.
The Sunnyvale, Calif.-based company also said it expected to report a profit in the fourth quarter amid a strong
market for personal computers.
''We see the PC market as pretty strong,'' Chairman W.J. (Jerry) Sanders III told analysts on a conference call,
adding Advanced Micro has seen strong PC demand in the United States, Europe and Asia.
''The worst is behind us,'' Sanders said, when asked about the overall semiconductor industry slump, which is
in its third consecutive year. ''Although we don't see a general upturn, I don't think we are in for a worse
environment.''
For the third quarter, Advanced Micro reported a narrow profit of $1 million, or 1 cent a share, on revenues of
$685.9 million, compared with a loss of $31.7 million, or 22 cents a share, on revenues of $596.6 million in the
year-ago quarter.
First Call, which tracks analysts' estimates, reported that Wall Street had been expecting a loss of 11 cents a
share, although analysts said there had been whispers in recent days of break-even earnings.
''Their profitability came in a little bit better from keeping a lid on operating expenses,'' said Scott Nirenberski,
a CS First Boston analyst. ''We were looking for break-even, some people were looking for a loss of around
10 cents.''
Advanced Micro said shipments of its AMD-K6 family of processors jumped by more than 1 million units to 3.8
million and AMD-K6 family processor sales increased 70 percent over the immediate-prior quarter.
AMD said sales of its K6-2, its K6 processor with a new instruction set called 3DNow! for two- and
three-dimensional computing, made up 80 percent of its processor sales.
AMD said its excellent manufacturing and sales execution enabled it to return to profits one quarter ahead of
expectations. AMD's other non-microprocessor businesses were flat, such as flash memory, a type of memory
chip frequently used in portable devices, were flat on a sequential basis.
Sanders said on the conference call that AMD's goal of shipping 4.5 million K6 family units in the fourth quarter
was ''do-able'' and that manufacturing capacity was not an issue.
The company also said it planned to launch a faster version of the K6-2 processor -- at a speed of 400
megahertz -- next quarter and planned to ship ''hundreds of thousands'' of units.
Advanced Micro said PCs powered by AMD-K6 family processors captured 31 percent of the total U.S. retail
market for desktop systems in August, the latest period for which data are available, according to PC Data.
In the rapidly growing market for systems priced below $1,000, PCs powered by AMD-K6 chips captured a
54-percent market share -- its highest retail market share yet.
However, analysts said that AMD still faces many challenges as it competes head on with Intel Corp. in the
microprocessor market. They contended AMD's earnings could have been better amid signs of resurging
demand for PCs, especially at the low end. AMD typically prices its chips at least 25 percent below Intel's, for
comparable performance.
''The issue is they made a penny in a pretty receptive market,'' said Scott Randall, a SoundView Financial
Group analyst. ''You have inventory refill, back to school buildup...and Intel was stumbling badly on the low-end
stuff.''
Since Intel introduced in late August a better performing version of its lower-cost Celeron chip for the
sub-$1,200 PC market, analysts said AMD faces more challenges.
''They have to dance as fast as they can to keep up with Intel,'' Nirenberski said. ''So far, so good, but that is
always a risk here.''
For the first nine months of 1998, the company reported total sales of $1.7 billion and a net loss of $126.3
million, or 88 cents per share. For the first nine months of 1997, AMD reported total sales of $1.7 billion and a
net loss of $8.7 million, or six cents per share.
More Quotes and News:
Advanced Micro Devices Inc (NYSE:AMD - news)
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