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AMD reports net loss after tough first quarter

Chief executive Dirk Meyer says the company is 'more nimble' following the spin-off of its manufacturing assets, though AMD still expects revenue to slide in the second quarter
Written by Larry Dignan, Contributor

AMD reported a first quarter net loss of $416m, or 66 cents a share, on revenue of $1.17bn, down 21 percent from a year ago.

However, chief executive Dirk Meyer said on Tuesday that AMD is "more nimble" following the spin-off of its manufacturing assets, though the company projects revenue to slide in the seasonally slow second quarter.

Even though AMD's quarter was tough, it still managed to beat Wall Street's low expectations. The company's net loss included a charge of four cents a share. Excluding that charge, AMD topped estimates by four cents. The first quarter for AMD was about burning off inventory that was built for demand that never arrived.

The company consolidated its chip-manufacturing joint venture, Globalfoundries, in its results. It used the term 'AMD Product Company' to describe its chip-design and product operations excluding the Globalfoundries business. AMD's chip design and product business had a net loss of $189m.

Like its much larger rival Intel, AMD forecasted some balance in supply and demand. "The severe inventory corrections of the last quarter have stabilised," said Meyer on a conference call with analysts. However, Meyer stopped short of saying the market has hit its lowest point, which Intel suggested recently, commenting: "I don't know how anyone can do that."

Meyer said customers are only buying the processing power they need. Notice AMD's plan: it is pitching itself as a value chip maker and hinting that Intel gives you more processor than you need. He touted AMD's Yukon and Congo platforms, which target light notebooks.

Chief financial officer Bob Rivet added that AMD saw some demand in the first quarter from value buyers. Nevertheless, Rivet said that second-quarter revenue will decline from the first quarter for AMD. AMD hopes to be cash-flow positive in the second half of the year.

Meyer was asked about Intel's launch of chips for the light, thin notebook market. Meyer said AMD was not planning to cede market share, but noted the second quarter was "murky at best". He added that Intel's CLUV move was in response to AMD's move.

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