To appreciate the woe that comes when you're Advanced Micro Devices, look no further than the No. 2 PC processor maker's second-quarter financial results, which were announced Tuesday.
While Intel and Texas Instruments are widely believed to have stabilized during the same period, AMD remained mired in a deep funk that saw the company report its 11th straight loss and its third year-on-year revenue decline. Slumping processor demand across the board also drove down gross margin to 37 percent, from 38 percent in the same quarter last year.
"In the second quarter, despite softness in the global economy, end-user PC demand stabilized, but the characteristics of the economy are playing out quite differently across customers, channels and particularly geographies," CEO Dirk Meyer said during a conference call with analysts and reporters. Translation: the tide lifting some boats isn't being enjoyed by all.
For the quarter that ended in June, AMD's loss narrowed to $330m, or 49 cents a share, from $1.92bn, or $1.97a share, in the same period last year. The red ink would have been much worse but for $86m, or 13 cents a share, in sales of older inventory AMD wrote down in the fourth quarter.
Sales slid 13 percent to $1.18bn from $1.36 in the second quarter of 2008. The resulting excess fabrication capacity, combined with lower average selling prices, were the two biggest contributors to AMD's lower gross margins.
Second-quarter sales came in below analyst expectations, and AMD's forecast that revenues will be "up slightly" during the current period mean the company isn't likely to meet forecasts for a 7-percent increase analysts had projected.
The company's shares sank 48 cents, or 12 percent, in after-hours trading to $3.60.
With things as bleak as they are at the moment, Meyer naturally turned attention to newer products. The current quarter will be the first to fully incorporate sales of its new six-core Istanbul processor, which is compatible with current sockets to make upgrading easy.
The company is also expecting gross margins in the second half of 2009 to improve, in large part because a larger percentage of chips sold will be made using 45-nanometer features, which cost less to make. ®