Less loss
Chip maker AMD has announced its Q1 figures and while they’re not great, they could have been worse.
It made a loss of £358 million, but it lost $1.772 billion during the previous quarter and $611m in Q1 ’07.
Having said that, $1.669bn of the Q4 ’07 loss was ‘ATI related’. $1.608bn of this was put down to ‘ATI impairment of goodwill and acquired intangible assets,’ which we take to mean a write-down of the current value of ATI compared to what they paid for it. This quarter’s charge implies they were off by $50m
Robert J. Rivet, AMD’s Chief Financial officer, gave this comment on the Q1 figures: ‘A seasonally weak first quarter was amplified by a challenging economic environment for consumers and lower than expected revenues of previous generation products, resulting in lower than expected revenues in all business segments.
‘However, we are encouraged by the market acceptance of our Quad-Core AMD Opteron server processors as well as our new chipset and graphics offerings. We remain committed to achieve operating profitability in the second half of the year, driven by our portfolio of new products and platforms and aggressive restructuring programs.’
He seems to be saying: ‘Our new product delivery wasn’t up to scratch and people didn’t buy as much of our older stuff as we had hoped, but we’ve sorted things out now and we’re cutting ten percent of the workforce so things should get more profitable.’
Here's a table taken from AMD's report showing where the revenue is coming from.
One encouraging stat was covered in a statement following Rivet’s comment. ‘First quarter 2008 gross margin was 42 percent compared to 44 percent in the fourth quarter of 2007 and 28 percent in the first quarter of 2007. The decrease from the prior quarter was primarily due to decreased microprocessor unit shipments.’
If, as the report seems to be asking us to, we take the slight drop-off in gross margin as an aberration, the trend is steady improvement in gross margin. And it wants to be as Intel is showing no signs of letting up.
As previously discussed, AMD’s hopes of turning things around lie primarily in improvements in its product execution. It has a lot of very promising products on the way this year and if it can deliver fully functional ones in timely fashion it may well achieve its aim of making a profit for the first time in six quarters and counting.
