A.M.D. Plans to Cut Back on Spending and Hiring

dougadam Active Member

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April 10, 2007
A.M.D. Plans to Cut Back on Spending and Hiring

By DAMON DARLIN
Advanced Micro Devices, which makes computer processors, said yesterday that a sharp decline in revenue was prompting it to make cutbacks in hiring and spending in order to reduce operating costs.
A.M.D. surprised Wall Street analysts yesterday by announcing that it expected to report revenue in the first quarter of $1.23 billion, far below what analysts had forecast. In making the revision, A.M.D. cited lower selling prices for its computer processors and â€œsignificantly lower unit sales.â€
The announcement raised questions of whether the slowdown was a result of A.M.D.â€™s battles for market share with the industry leader, Intel, or whether it was an early signal of a slowdown of sales of PCs and servers for corporate data centers.
A.M.D. had said in January that it expected to report revenue of about $1.67 billion in the first quarter, but in March it warned analysts that revenue would be lower. The consensus among Wall Street analysts was $1.53 billion. The companyâ€™s latest projection is 20 percent below that.
â€œItâ€™s a big drop,â€ an analyst with A. G. Edwards, David Wong, said, â€œBut I donâ€™t think it necessarily reflects on the end market.â€
Other analysts also saw no unexpected slowdown in consumer PCs sales, although sales of computer equipment to corporations have continued to be weak.
It might suggest, Mr. Wong said, that A.M.D. was losing market share to Intel.
A.M.D. had gained market share last year, garnering as much as 25 percent at the end of 2006. But as it was doing so, its average selling price fell to $75 at the end of the year from $99 at the beginning. Intelâ€™s average selling price fell, but at a far lower rate, to $130 from $137.
Intel revamped its product line in 2006 and sold more of its higher-priced chips to makers of servers. Intel has not cut its list prices, analysts said, while A.M.D. has cut its list prices several times in the last 12 months.
Dean McCarron, who tracks the PC semiconductor market for Mercury Research of Cave Creek, Ariz., said that A.M.D.â€™s problem might stem from the way it shifted much of its production to large PC makers like Dell in 2006. Demand slowed from the big makers, he said, and as A.M.D. tried to move the excess inventory to other smaller makers, it discovered those customers were buying from Intel.
â€œDemand that existed at the beginning of the first quarter didnâ€™t exist at the end,â€ Mr. McCarron said. The shift in consumer preference to notebook PCs from desktop models may have also played a role â€” A.M.D. is not as strong in products made for notebooks.
A.M.D.â€™s plans to reduce its costs suggested to analysts that the company was acknowledging that the sharp decline in prices was going to continue. A.M.D. said it would reduce 2007 capital spending by about $500 million from $2.5 billion. It said the cutback would not affect its production plans for 2007.
News of the overhaul sent A.M.D. stock up 49 cents, or 3.8 percent, to $13.35. Intel shares rose 52 cents, or 2.7 percent, to $20.10.
The revenue shortfall also had Wall Street analysts adjusting their estimates of the companyâ€™s first-quarter loss.
Mr. Wong, for example, said that the company would report a loss of about $400 million, or 77 cents a share, including an adjustment for a merger-related charge.
The company plans to announce its first-quarter financial results on April 19. Intel will announce its results next Tuesday.
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http://www.nytimes.com/2007/04/10/technology/10chip.html?ref=technology

dougadam, Apr 10, 2007 IP

ARonald Peon

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They are finding it difficult to keep the price war going. Today the fastest processor they are selling (the 6000+ processor) costs only $241 which still loses to a midrange processor from Intel. Things may improve if the barcelona processors are as fast as they are claimed to be.

ARonald, Apr 10, 2007 IP

Anita Peon

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AMD is certainly in a lot of trouble. Intel is pretty committed to delivering 80 core processors within the next 5 years, and we haven't heard peep from AMD.

Anita, Apr 10, 2007 IP

uttoransen Prominent Member

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Anita said: ↑

AMD is certainly in a lot of trouble. Intel is pretty committed to delivering 80 core processors within the next 5 years, and we haven't heard peep from AMD.
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well i was planing to get a dual core, but then 80, i think i should wait now! but then what is the use of that speed, am happy with my pc!

AMD as far as i know, has over heating problems, other wise it works nice, and get less crashes with windows os!! thanks for the info though

uttoransen, Apr 10, 2007 IP

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A.M.D. Plans to Cut Back on Spending and Hiring

dougadam Active Member

ARonald Peon

Anita Peon

uttoransen Prominent Member

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