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AMD says the industry hasn't hit bottom

Things keep getting worse for AMD as it tries to turn itself around and return to its former profitability. The world's second largest chipmaker announced its Q1 2009 financials yesterday and posted a large loss and falls in share prices.

AMD said that the company lost $416 million in the previous quarter amounting to a loss of 66 cents per share. Yahoo Tech reports that the loss per share was a bit better than Wall Street expected. One-time charges relating to the spinoff of AMD's foundry operations into a new company now called GlobalFoundries accounted for some of the loss.

The one-time charge for the spin off was $195 million. Without that charge, the loss per share would have been 62 cents. Factoring out the onetime charge, the loss was 4 cents per share under the 66 cent per share loss expected by analysts.

AMD sales overall dropped 21% to $1.18 billion, higher than the expected $978 million. AMD told analysts that it expected sales in Q2 to drop, a contrast to rival Intel who expects sales to increase in Q2. Yahoo Tech expects AMD sales in Q2 to be around $975 million, down 28% from Q2 208 sales of $1.35 billion.

AMD CEO Dirk Meyer said, "The economy is still weak, making it very difficult to forecast end-user demand. I've heard some say we've hit bottom. I don't know how someone could say we've hit bottom in the current economic climate."

Meyer is referring to Intel reporting that it believes that the industry has hit the bottom and demand along with sales will increase in Q2. AMD also reported that it had sold fewer processors and that the overall price of the processors it did sell were down.

Sales of AMD GPUs were down, but the price of the GPUs sold was up. GPU sales fell 15% for the quarter with $222 million in sales. The purchase of ATI continues to be a major source of lost profit for AMD.

AMD reported a gross profit margin for the quarter of 35%, 5% less than analysts expected.





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