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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Yousef who wrote (45882)	1/14/1999 1:47:00 AM
From: Yougang Xiao	Read Replies (1) \| Respond to of 1572946

WSJ's take on Q4: Price-Cutting Spurred by Competition Weakens Profits at Chip Maker AMD By DEAN TAKAHASHI Staff Reporter of THE WALL STREET JOURNAL Advanced Micro Devices Inc.'s fiscal fourth-quarter profit fell short of analysts' estimates, as heavy price cutting and a production snag took a toll on chip sales. The Sunnyvale, Calif., chip maker reported net income for the period ended Dec. 27 of $22.3 million, or 15 cents a diluted share, compared with a loss of $12.3 million, or nine cents a share, a year earlier. Analysts' consensus estimate was 18 cents a share, according to First Call, and some analysts expected more. Revenue was $788.8 million, up a healthy 29% from $613.2 million a year earlier. The company said it sold about 5.5 million K6 microprocessors during the quarter, up from 3.7 million units sold in the third period. But AMD, facing stiff competition from Intel Corp., Santa Clara, Calif., experienced falling prices. C.B. Lee, an analyst at Sutro & Co. in San Francisco, estimated AMD's average selling price was $88 in the fourth quarter, compared with $100 in the third quarter. "Their large customers appear to be extracting big price concessions," Mr. Lee said. AMD released its results after stock markets closed. Its shares closed at $27.75, down $3.75, or nearly 12%, in New York Stock Exchange composite trading Wednesday, and changed hands in after-hours trading at $27.625, according to Instinet Inc. AMD Chief Executive W.J. "Jerry" Sanders III said in a conference call with analysts a design flaw prevented the company from producing more of its highest speed 400-megahertz K6-2 microprocessors. The company fixed the design, and the improvements are expected to take effect in February. Mr. Sanders said AMD's nonmicroprocessor businesses lost money in the quarter, and nonmicroprocessor sales should be flat in the current first quarter. He said AMD expects to produce 5.5 million microprocessors in the first quarter, but he hopes to get better prices because more of the chips will run at 400 megahertz or higher. In the first quarter, any revenue improvement will depend on whether AMD can get higher prices, but Mr. Lee at Sutro said that will be difficult considering Intel's determination to cut prices and retake retail sales from AMD. AMD hopes to gain share on Intel by closing the gap in performance as it launches a faster K6-3 chip during the first quarter and then a next generation K7 chip at midyear. For all of 1998, AMD reported a loss of $103.9 million, or 72 cents a share, compared with a loss of $21.1 million, or 15 cents a share a year earlier. Revenue was $2.54 billion, up 7.6% from $2.36 billion a year earlier. For the year, AMD shipped 13.5 million microprocessors. Mr. Sanders said AMD expects to sell 20 million to 25 million microprocessors in 1999.