AMD reports 33 percent drop in Q4 revenue

AMD reports a steep loss and declining revenue for the fourth quarter as it was hammered by the economic slowdown.

Advanced Micro Devices reported a steep loss and declining revenue for its fourth quarter as the chipmaker continued to suffer amid the faltering economy.

AMD reported a loss of US$1.42 billion for the quarter ended Dec. 27, an improvement on its loss of $1.77 billion a year earlier. Revenue fell to $1.16 billion, however, down from $1.74 billion in the fourth quarter of 2008, AMD said.

The loss included a goodwill impairment charge of $684 million related to AMD's acquisition of ATI Technologies in 2006. Excluding that and other one-time charges, the loss would have been $418 million, or $0.69 per share, AMD said.

Analysts had been expecting revenue of $1.23 billion and a loss per share before charges of $0.54, according to a poll by Thomson Reuters.

AMD expects revenue from the first quarter this year to be lower than in the prior quarter, it said. It cited the weak economy, limited visibility and "corrections in the supply chain," which suggests its computer-making customers are cutting orders.

The results follow AMD's news on Monday that it will cut 1,100 more jobs and lower its workers' salaries to reduce costs. The job cuts follow about 2,100 layoffs that AMD announced last year.

Almost the entire PC industry is suffering from the economic climate, which has caused both businesses and home users to cut back spending. Fourth-quarter PC sales declined by 0.4 percent in the fourth quarter, IDC said last week, and it expects them to stay weak through at least the end of this year.

Earlier Thursday, Microsoft announced an 11 percent drop in net income for the December quarter, while revenue rose just 2 percent, showing how the recession is affecting even the strongest companies.

Intel, AMD's larger rival, said on Wednesday it would cut up to 6,000 jobs worldwide and close four chip plants. A week earlier it announced that its fourth-quarter profits had plummeted 90 percent from a year earlier, on a 23 percent drop in revenue.

AMD is in the midst of a plan to break itself into two companies to help turn its business around. The plan would see AMD continue to design and market its chips but spin off its costly manufacturing business into a separate company that will be owned mostly by an investment company in Abu Dhabi.

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James Niccolai

IDG News Service
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