AMD reports $600 million loss amid higher revenues - UPDATE 2

Posted by Humphrey Cheung

Sunnyvale (CA) – AMD has reported a $600 million dollar loss for the 2nd quarter ending June 30th 2007.  The company’s revenues rose to $1.38 billion, which is 13 percent higher from the same period last year.

The loss includes a $130 million dollar charge that AMD took to acquire ATI.  It also spent $78 million on integrating ATI employees.  Revenues broken down by division include $1.098 billion for the computing division while the graphics and consumer electronics divisions made $195 and $85 million respectively.

Robert J. Rivet, AMD’s Chief Financial Officer said, “While we made solid progress in the second quarter across a number of fronts, we must improve our financial results.”

AMD blames the results partly on the “seasonally down quarter” and says revenues should increase in the third quarter “in line with seasonality”.

AMD will be launching its native quad-core "Barcelona" CPUs in the third quarter and hopefully that will stem the losses.  However, Intel isn't standing still and plans to preemptive strike by drastically cutting quad-core CPU prices.

Hector Ruiz, AMD’s Chairman and CEO, said the company will reduce expenditures by slowing down the ramp of Fab 38 which should reduce spending by $200 million this calendar year.  Fab 38 will produce 300 mm wafers and is a conversion of the Fab 30 plant in Dresden Germany.

Dirk Meyer, AMD’s President and Chief Operating Officer, said the company was eyeing breaking even towards the end of the year, but added “our bottom line results are obviously unacceptable”.

65nm yields are turning out to be quite good, according to Meyer who said that AMD was “very happy” with current yields.  Despite the success, AMD’s upcoming Barcelona is still taking a while to get to market.

“It’s (Barcelona) complicated and it’s taking a little bit more design work to get the final rev in place,” said Meyer.