AMD reports 33 percent drop in Q4 revenue

Advanced Micro Devices reported a steep loss and declining revenue for its fourth quarter as the chipmaker continued to suffer amid the faltering economy.

AMD reported a loss of US$1.42 billion for the quarter ended Dec. 27, an improvement on its loss of $1.77 billion a year earlier. Revenue fell to $1.16 billion, however, down from $1.74 billion in the fourth quarter of 2007, AMD said.

The loss included a goodwill impairment charge of $684 million related to AMD's acquisition of ATI Technologies in 2006. Excluding that and other one-time charges, the loss would have been $418 million, or $0.69 per share, AMD said.

Analysts had been expecting revenue of $1.23 billion and a loss per share before charges of $0.54, according to a poll by Thomson Reuters.

"The fourth quarter is going to be remembered for the severe stresses placed on the global economy and on our industry," AMD President and CEO Dirk Meyer said in a conference call to discuss the results. "The global economic environment led to a softening in end-user demand for PCs and servers in what is usually the year's strongest quarter."

AMD expects revenue from the first quarter this year to be lower than in the quarter that just ended, it said. It cited the weak economy, limited visibility and "corrections in the supply chain," meaning computer makers have been cutting orders for chips to clear out excess inventory.

The volume of microprocessors AMD shipped was down in all segments, CFO Bob Rivet said. Average selling prices fell overall, he said, although they were kept afloat in the server segment by new quad-core Opteron chips that shipped in the quarter.

The Computing Solutions Group, which sells AMD's PC and server chips, reported an operating loss of $431 million, including a $227 million writedown against excess inventory. Revenue from the group was $873 million, down 27 percent from the third quarter.

Its graphics business reported an operating loss of $10 million on $270 million in revenue, which was down 30 percent from the revenue in the third quarter.

The results follow AMD's news on Monday that it will cut 1,100 more jobs and lower its workers' salaries to reduce costs. The job cuts follow about 2,100 layoffs that AMD announced last year.

Almost the entire PC industry is suffering from the economic climate, which has caused both businesses and home users to cut back spending. Fourth-quarter PC sales declined by 0.4 percent in the fourth quarter, IDC said last week, and it expects them to stay weak through at least the end of this year.

Earlier Thursday, Microsoft announced an 11 percent drop in net income for the December quarter, while revenue rose just 2 percent, showing how the recession is affecting even the strongest companies.

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