DailyTech - AMD Posts Another Quarterly Loss

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Hardware AMD Posts Another Quarterly Loss
Shane McGlaun (Blog) - July 22, 2009 10:49 AM

46 comment(s) - last by erikejw.. on Jul 23 at 10:00 AM

AMD thinks things will turn around in the second half of 2009

AMD has posted its financial information for Q2 2009 and has reported yet another loss. The silver lining to the quarterly loss cloud is that the financials showed some improvement over the previous quarter. AMD also remains optimistic about Q3 and the rest of 2009.

AMD will be releasing new platforms before the end of the year that the chipmaker hopes will help turn its fortunes around. The company will be releasing its new Opteron processor servers, a market that AMD is still very competitive in, and will releases new notebook platforms.

According to EWeek, CEO Dirk Meyer notes that AMD worked on controlling costs in the first half of 2009 and that the cost controlling methods are expected to pay dividends in the second half of the year. Perhaps the largest of those cost-controlling methods was the spinoff of AMD's foundry operations into an independent company.

Meyer said during a call with financial analysts, "With a strong flow of new products and a leaner cost structure, coupled with assumption of modest seasonal growth, we are positioned for a stronger financial performance in the second half of this year."

Among the new platforms for notebooks that AMD intends to let loose onto the market in Q3 2009 are the Tigris platform for mainstream notebooks and an unnamed platform that is aimed at thin and light notebooks.

AMD reported a loss of $330 million for Q2 2009 amounting to $0.49 per share with revenue for the quarter of $1.18 billion. Analysts on Wall Street had predicted a loss for AMD of $0.47 per share with revenue of $1.13 billion. Despite the loss for the quarter, the numbers AMD posted looked better compared to a year ago.

Analyst John Spooner told eWeek, "The chip maker, like its rival Intel, showed sequential improvement in revenue," Spooner wrote. "Unit shipments fared reasonably well, with some improvement in the server space. Thus there are signs that point to AMD's business improving and the company marching toward its goal of becoming profitable (at least on a quarterly operating basis) in the second half of the year."

AMD rival Intel did well for the quarter until the massive EU fine was deducted making for $398 million loss.

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RE: AMD mid-range products

By Targon on 7/23/2009 7:25:58 AM , Rating: 2

I don't think you understand the expenses that come from continually having to do research and development to release faster products every few months. If the cost of manufacturing plus R&D costs is less than the amount that a company can bring in, the company loses money.

Now, these days, we are very familiar with cheap chips being everywhere. The cost of manufacturing has dropped due to process improvements, and the fact that AMD has to keep prices low to be competitive with Intel is the ONLY reason why we see cheap chips. It makes NO sense to sell the fastest performing chip on the market for less than the cost your competitors are selling their chips. Keeping the prices reasonable is one thing, but making them cheap only works if you can sell enough volume to make a good profit.

Now, Intel has the manufacturing capacity so they can make many more chips than AMD, but Intel was illegally reducing or keeping AMD chips from being used or supported back when AMD really had a better product. This means that even if AMD had the manufacturing capacity to satisfy demand back when they were in the lead, Intel was there forcing computer makers not to sell too many systems with an AMD processor for risk of being cut off from supplies of Intel products. With fewer sales, AMD would also be forced to aim for higher margins on the chips they COULD sell(due to demand).

I remember the days leading up to the release of the original Athlon. Asus wanted to support the new chip, but was concerned that Intel might cut them off. Asus was selling their first AMD based motherboard in a plain OEM style box with no art and no hype surrounding the product as a result. There was demand, and the K7M was well received, but it still was subject to being unadvertised by Asus to try and avoid getting cut off from Intel. Why should a motherboard manufacturer be afraid of releasing a motherboard under a lot of hype(the way any new product normally would be)?

So, prices were higher back then...it was EXPECTED for the highest performing product to be at least as expensive as the competition is selling it's products. AMD has switched tactics since those days to sell in volume because AMD now has the ability to make enough chips to satisfy the demand.

Have you ever heard of Intel dropping prices on the high end parts, except when AMD has a competitive part that forces them to?

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