CFO: AMD to give Intel a run for its money

Shaking off an industry-wide slump in the semiconductor market, Advanced Micro Devices Inc. (AMD) is on track to meet expectations for the current quarter and will keep up with technology advances made by its fiercest competitor, Intel Corp., according to the company's finance chief.

Presenting a snapshot of the company's goals at the Robertson Stephens Technology Conference, AMD's Chief Financial Officer Robert Rivet Wednesday pledged a return to profitability in the second half of the year based on its growing worldwide market share in both revenue and units shipped.

Net sales for the first quarter is expected to come it at roughly US$900 million, with a small loss in earnings per share, Rivet said. Revenue will be slightly down from the fourth quarter last year but in line with typical seasonal trends, Rivet said.

Analysts had expected the company to report revenue of $901.48 million with a loss of $0.06 per share, according to a poll by Thomas Financial/First Call.

Meanwhile, the company said it is keeping pace with its competitors as it develops new chip technology for small computing devices, PCs and servers.

"We do not see the competition pulling away from us," Rivet said, speaking Wednesday as Intel hosted its annual developer forum just blocks away. At the forum, Intel announced its new technologies for servers and other computing devices.

AMD is banking on its new Athlon line of chips, which Rivet said has so far been a success competing against Intel's Pentium 4 processor. The company is also looking ahead to its new 64-bit Hammer processor, which made its debut here this week.

The company will have an Athlon chip running at the equivalent of 1.5GHz for notebook computers in March. A 2GHz desktop Athlon is expected a month later. In the second quarter of this year, AMD also plans to begin shipping a 2.4GHz version of the Hammer, ramping up its performance in 2003.

Meanwhile, Intel has said from its developer forum it expects a 1.6 GHz version of its Pentium 4 chip for laptops out in early March, ramping it up to 2GHz by the year's end.

"AMD's road map keeps it pretty much neck and neck with Intel," said Eric Rothdeutsch, a managing director of semiconductor research at investment bank Robertson Stephens Inc.

With the semiconductor industry in a rut, as revenue generated in the overall chip market fell collectively more than 30 percent in 2001, both Intel and AMD will have to advance their line of chips in anticipation of an upswing in the IT industry, which so far few analysts or industry executives are brave enough to predict.

Sales of flash memory products, which mainly is supplied to the market for portable and consumer electronics, has hit bottom, Rivet estimated. "The flash business is low but if you look at it long term it is definitely a place to be," he said.

AMD derives roughly 30 percent of its revenue from the sale of flash-memory products, according to Robertson Stephens.

PC sales could potentially rebound later this year as IT departments purchase new speedier machines, Robertson Stephens said here based on its market research. Also, analysts said sales of mobile computing devices such as cell phones are expected to rise, boosting sales for chip makers that target that market.

"We do think the worst is behind the economy," Rothdeutsch said. "The semiconductor inventories are being corrected, and IT spending is flat but positioned for a return."

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