Restructuring pushes up AMD Q4 net loss

Advanced Micro Devices Inc.'s (AMD) journey down the path to profitability hit a roadblock in the fourth quarter as revenue decreased by 28 percent from the fourth quarter of 2001 to US$686 million and the company posted a net loss of US$855 million.

Excluding restructuring and other charges, the Sunnyvale, California, company lost US$235 million, or US$0.68 per share, widely missing analyst estimates of a US$0.42 loss per share polled by Thomson Financial/First Call. However, fourth-quarter revenue did slightly exceed analysts' expectations of US$683 million. In the third quarter, AMD posted a net loss of US$254 million on sales of US$508 million.

The company took a US$331 million restructuring charge due to the severance packages given to employees after AMD announced it would lay off 2,000 workers by the second quarter of this year. It also took a charge of US$46 million due to "a one-time research and development expense in connection with product development services received in the fourth quarter," AMD said in a statement.

In December, AMD predicted fourth-quarter revenue would be about US$700 million, citing strong demand for its processors and flash memory products.

The full year was not kind to AMD, which posted a net loss of US$1.3 billion on revenue of US$2.7 billion for 2002. In 2001, the company lost nearly US$61 million on revenue of US$3.9 billion. Inventory problems caused the company to cut back on production in the third quarter.

AMD has said it will cut costs to become profitable by the fourth quarter of 2003. The company is counting on the launch of its Opteron server chip and Athlon 64 chip in March or April to boost its 2003 revenue, it has said.

Ahead of the announcement, AMD's stock on the New York Stock Exchange (AMD) closed down US$0.25, or 3.36 percent, to US$7.20.