AMD Posts Huge Loss, Despite Positive Predictions

Advanced Micro Devices Inc. on Thursday drained the market momentum established by rival Intel earlier in the week, when the world's second-largest chip manufacturer posted an $854.7 million loss on revenue of $686.4 million for its fourth quarter, ended Dec. 29. The company's significant dip in earnings--down from a fourth-quarter 2001 loss of $15.8 million on $951.9 million in revenue--can be attributed largely to restructuring charges and a deferred tax write-off.

The write-off and restructuring charges are the result of AMD's plan to lay off 2,000 employees, 15% of its staff. Without these charges, the company would have lost $235.1 million for the quarter. AMD's dismal performance comes despite its predictions that it would narrow financial losses during the fourth quarter.

For all of 2002, AMD's losses amounted to $1.3 billion, compared with a loss of $60.6 million for 2001. Revenue dropped 31% in 2002, to $2.7 billion.

AMD's challenge is to cut costs in preparation for the upcoming launch of its Opteron 64-bit processor by July. Last week AMD said it would soon begin working with IBM to develop microchip technologies at IBM's Semiconductor Research and Development Center in East Fishkill, N.Y. An objective of that alliance is to produce 65-nanometer chips for commercial use by 2005.