AMD has at least two different occasions made it clear that the quarterly report would be worse than expected. According to the report that has now been published, AMD made a loss of $611 million since the last quarter and the revenue went down by $540 million since the fourth quarter of 2006; from $1.773 to $1.233 billion. The reasons doesn’t really need to be said again, but the growing pains AMD experienced during the last qaurter and the beginning of this year led to a shortage of processors in both retail and OEM channels, which both were left waiting for delivery.
“Second, the pricing pressure that started in Q2 last year continued in the mainstream of our CPU business as our competitor did everything in their power to protect their monopoly.” – Dirk R. Meyer, AMD President
The price war with Intel and lower demand left a mark in the budget as well. AMD’s means to change this have already been announced, but are strengthened by the statements made during the conference call earlier this week.
“To regain momentum on the top line, we have accelerated some key initiatives. We have simplified our sales and marketing organization in order to improve our responsiveness to customer demand. We have restored our value proposition in the channel and refocused marketing spending on demand generation programs, and we have increased our emphasis on acquiring new customers and broadening our portfolio with existing customers.”
Meyer also says that AMD will convert fab 30 to a 300mm plant (300mm is the size of the wafers) and that AMD has to try and catch up with Intel in the manufacturing process race. AMD will work hard to get its first 45nm processors out on the market the first half of 2008.
All this together with the launch of the R600 series next month will result in a pleasant positive income. In a related matter, the merger with ATI cost AMD $28 million in stock compensations, $23 million in related taxes and $113 million in other merger-related expenses.
The total loss was spread across more or less all segments where, even if the revenue went up with both graphics cards and chipsets, they were both losing money. Robert J. Rivet, Chief Financial Officer, also revealed that AMD is planning to sell its 200mm plant and land that will be left over when making its market and sales division more efficient.
Intel has at the same time reported a total revenue of $8.9 billion and a net income at $1.6 billion ($1.7 billion gross). The revenue was slightly lower than the last quarter, down by 9%, while the income was up by 13%.
During the first quarter AMD lost 4.5% of the processor market to Intel, which is now back on the “right” side of the 80% mark; 80,2%. AMD landed at 11.1% after losing another tenth of a percent.
