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AMD: Article

AMD Shot Down in Mid-Flight

AMD Makes Further Inroads in China

The war with Intel has left high-flying AMD shot full of holes with its precious server ASPs limping and its stock price in tatters, a situation that might maintain at least until it can get Barcelona, its highly touted quad-core, out and take some of the wind out of Intel's sails.

Apparently the newfangled Clovertown quad is already winning significant business for Intel and AMD is anticipating a worse first half than second, but AMD management expects this whole year to be "very, very challenging."

AMD, which warned of bad results two weeks ago and confessed this week to underestimating Intel's pricing, came in Tuesday with Q4 losses of - eek!!! - $574 million, or $1.08 a share, on revenues down 3.5% to $1.77 billion. Wall Street had figured it could clear at least 10 cents.

This time last year it realized $85.6 million, or 21 cents a share, on revenues of $1.84 billion.

AMD's gross margin this time through was a crippling 36% compared to 57% last year.

The company's $5.4 billion October acquisition of graphics chip house ATI - from which wonderful things are eventually expected - weighed down results. AMD took $550 million, or $1.04 a share, in acquisition-related charges, and another $27 million, or five cents a share, in stock-based compensation expenses.

ATI kicked in $398 million for the weeks it was part of AMD but cost AMD four cents because of an operating margin of -3%.

AMD said its MPU shipments were up 26% year-over-year thanks to record numbers of notebook parts moving out the door (notebook revenues were up over 40%) though server shipments were flat sequentially. Opterons took all the heat, the company said.

AMD thinks it took share in desktops.

Lehman Brothers estimates server ASPs were down an average 25%-30% and up to 47% in some cases. Server revenues were down 30% sequentially to $244 million.

This quarter AMD expects wimpy revenues of between $1.6 billion and $1.7 billion.

In self-defense, AMD is trying to move up its transition to both 65nm and 45nm. It's targeting a gross margin of 50% for the new year.

AMD CEO Hector Ruiz, who indicated he was willing to let the price war rage hoping to take share, also said, "We have actually forced the competition to become more efficient, but in doing so, it made us realize that we have to raise our own efficiency to a higher level." Meaning there's going to be belt-tightening to achieve its gross margin target while it also builds capacity. It's figuring on a boost from Vista's release.

For the year, despite market share gains, AMD lost $166 million, or 34 cents a share, on revenues of $5.65 billion.

AMD Makes Further Inroads in China
In the ping-pong game of processor chips, AMD returned Intel's Sun volley Thursday by winning a notebook and desktop contract with TCL Computer, the fourth-largest PC supplier in China.

The win gives AMD representation at the Top 7 Chinese computer vendors.

TCL will start shipping in April.

Meanwhile, AMD released two new low-power mobile chips, the Sempron 3500+ and the Turion 64 X2 dual-core TL-52, intended for thin clients and single-board computers.

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SYS-CON's Security News desk trawls the world of security for news of software, hardware, products, and services that seems likely to be of interest to infosec professionals and summarizes them for easy assimilation by busy IT managers and staff.

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