AMD preps for market share battle

Despite a weak PC market and lower-than-expected earnings in the fourth quarter, the 2000 fiscal year was "the most successful year in AMD's history," proclaimed Advanced Micro Devices Chairman and Chief Executive Officer W.J. "Jerry" Sanders at the company's annual shareholders' meeting on Thursday.

After four years of operating at a loss, AMD returned to profitability with net income of US$983 million on annual sales of $4.64 billion in fiscal 2000, a 63 percent increase over 1999's sales. "AMD is, for the first time, very secure in its balance sheet," Sanders said.

More importantly, the company attracted kudos from the industry in 2000 for its new Athlon chip -- International Data Group Inc.'s PC World magazine dubbed it 2000's "Product of the Year" -- and began to make inroads into the Intel Corp.-dominated high-end PC market. Sanders said that in 2001, the company will continue battling for market share with Intel and shedding its old reputation as a low-end processor supplier. (International Data Group Inc. also owns the IDG News Service.)One conspicuously missing element in AMD's arsenal is a chip for the rapidly-growing mobile PC market. To fill that gap, AMD is introducing a new mobile Athlon chip, code-named "Palomino." The chip began shipping in March 2001, and Sanders said the first notebooks utilizing Palomino will hit the market in May.

Sanders said he agrees with those who say annual growth in the PC market will continue slowing down; he estimated that the market's growth rate will drop off to the mid-teens.

"There is no question that the PC industry is maturing," he said. "The PC industry is 20 years old. All 20-year-olds are maturing."

But less growth won't impact AMD's sales and expansion, Sanders said. AMD will simply grow by poaching market share from Intel, he added. By AMD's own estimate, the company ended 2000 with 17 percent share in the PC processor market. Intel's market share is roughly 80 percent.

AMD also hopes to combat the ubiquitous "Intel Inside" marketing slogan with its own television ad campaign beginning in the fourth quarter of 2001, Sanders said.

Sanders also reiterated the announcement made three months ago, that he will retire as AMD's CEO at next year's shareholders' meeting in April 2002. Sanders founded AMD more than 30 years ago; taking over will be Hector de J. Ruiz, who joined AMD last year as president and chief operating officer.

His planned resignation adds an extra incentive to make 2001 a memorable year for AMD, Sanders noted: "The better we perform, the more graceful my exit will be."

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Stacy Cowley

PC World
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