AMD Reports 4Q Loss on Acquisition Costs

Advanced Micro Devices Inc., the world's No. 2 microprocessor maker behind Intel Corp., said Tuesday that it swung to a loss in the fourth quarter as the company incurred heavy costs related to its acquisition of graphics chip maker ATI Technologies Inc., negating record processor sales.

A brutal price war and Intel's increasingly competitive processors also weighed on AMD's earnings, as the company said overall shipments of its high-margin server chips were essentially flat compared with the third quarter and that selling prices for those chips were down significantly.

However, AMD's overall microprocessor shipments rose 26 percent over last year; the company said it set a new record, although it did not immediately say what the old record was. The company said it experienced especially strong growth in shipments of laptop chips.

For the quarter ended Dec. 31, the Sunnyvale-based company posted a net loss of $574 million, or $1.08 per share. For the same quarter last year, AMD earned $96 million, or 21 cents per share.

AMD said after the markets closed that the fourth-quarter figures include $550 million, or $1.04 per share, in acquisition-related charges and $27 million, or 5 cents per share, in stock-based compensation expense.

Revenue for the quarter was $1.77 billion, compared with $1.84 billion at the same time last year.

Analysts were expecting the company to earn, on average, 10 cents per share on $1.74 billion in revenue for the quarter, according to a survey by Thomson Financial.

"We believe we once again gained microprocessor unit share in the quarter, as we did in the year, by continuing to execute against our customer acquisition strategy and our product, technology and manufacturing plans," Robert J. Rivet, AMD's chief financial officer, said in a statement.

The company said it expects revenue in the range of $1.6 billion to $1.7 billion in the first quarter.

Before the report was released, AMD shares dropped 2 cents to close Tuesday at $17.51 on the New York Stock Exchange. The shares fell another penny in after-hours trading.


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