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AMD Misses Earnings Estimates, May Post 3Q Loss

AMD misses earnings estimates for the second quarter and warns that it may post a third-quarter loss.
In keeping with a warning it issued last week, desktop and server chipmaker Advanced Micro Devices Inc. Thursday sharply missed earnings expectations for its second quarter ended July 1. The company also said that third-quarter sales could fall by as much as 10% to 15%, possibly leading to an operating loss for the period.

After the close of regular trading on Wall Street Thursday afternoon, AMD said second-quarter revenue from continuing businesses fell 11% year over year to $985 million. Net income fell 91% to $17 million or 5 cents per share. Analysts surveyed by First Call prior to last week's warning were, on average, expecting the company to post per-share earnings of 27 cents. In a statement, AMD chairman and CEO Jerry Sanders said the quarter presented "a more challenging semiconductor business environment than anticipated."

Observers say AMD has been hurt by aggressive price competition from leading chipmaker Intel. "AMD always positioned itself as a low-cost alternative to Intel, but they are losing that distinction as Intel cuts prices," says Technology Business Research analyst Mark Shifrin. AMD also said the downturn in the networking and communications sectors has hampered demand for its Flash memory products.