Thursday, April 13, 2006
Microprocessor supplier AMD Inc. reported first-quarter 2006 net income of $185 million, or 38 cents per share on sales of $1.33 billion, as the company saw strong sales of its AMD Opteron processors and high gross margin.
In the year-ago quarter, AMD (Sunnyvale, Calif.) lost $17.4 million, or 4 cents per share on sales of $1.23 billion. The company attributed the poor results to the Spansion memory business which the company has since spun off.
Analysts surveyed by Thomason First Call expected AMD to earn an average of 30 cents per share on sales of $1.33 billion.
Not all is rosy, however, for AMD. The company expects second quarter sales to be flat to slightly down seasonally from the first quarter of 2006, although sales are still projected to be 65 percent higher than second-quarter 2005 results.
During a conference call with analysts, AMD chief executive Hector Ruiz explained the company is being cautious with second-quarter expectations, because “the second quarter is traditionally the most difficult quarter”. He cited some weak market conditions in western Europe, which has lingering inventory issues.
Ruiz dodged repeated questions during the call about the predicament or future strategies of struggling archrival Intel Corp. “We will continue to executive the strategies we used in the first quarter, to differentiate ourselves from our competitor.”
Still, the fortunes of the bitter competitors remain undeniably linked. Several online reports earlier Wednesday noted that the stock price of Intel Corp. fell in anticipation of AMD’s earnings announcement. But according to reports, AMD’s stock price has too fallen 17 percent since Intel warned in early March it would miss first-quarter guidance, leading some analysts to believe the PC market is weakening.
In its first quarter, AMD posted record gross margin of 58.5 percent, compared to 57.3 percent in the fourth quarter of 2005. AMD attributed the increase largely due to product mix improvement, higher desktop and mobile ASPs, and manufacturing efficiencies. AMD reported record AMD Opteron processor sales, driven in particular by strong demand for dual-core processors for servers and workstations.
AMD expects second-quarter gross margin of 55 to 60 percent.
The company added that production at its 90-nanometer Fab 36 would continue to ramp up.
By: DocMemory
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