Sunnyvale (CA) – AMD today reported another painful quarterly loss today in what the company called a “difficult start into the year”. Losses occurred across all business units, with the missing Barcelona an “increased consumer exposure” being blamed on a loss of $358 million. Over the past six quarters, AMD has lost $4.3 billion.
The loss included $50 million in AT-related charges, $8 million from the firm’s graphics unit and $11 million from consumer electronics operations. Revenue was $1.51 billion, about $500 million less than what is generally believed the company currently needs to hit a break even at its current cost structure.
The Q1 revenue was 22% above the Q1 2007 result, but 15% below of Q4 2007. The loss dropped from $611 million in Q1 2007 and $1.77 billion in Q4, which included a $1.68 billion write-off due to the decreased value of the ATI acquisition.
“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,” said chief financial officer Bob Rivet in a statement. “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.”
During a conference call with analysts, AMD chief executive officer Hector Ruiz announced that all business units are being scrutinized at this time. While core businesses (graphics, CPU) will be “optimized”, the executive said that non-core business may be sold. Non-core businesses include, for example, the consumer electronics business.
No details were provided, but Ruiz said that the company is “moving at a fast pace” and an announcement will be made “soon” – indicating that a decision has been made already.
Ruiz said that the reduction in workforce as well as selling business units will have the goal to bring down the quarterly break even requirement to about $1.5 billion. The company wants to achieve this goal before the announcement of the “Asset Light” program. Ruiz confirmed that AMD still believes that it can achieve a profit in the second half of this year.
The company warned of lower than expected revenue on April 7. AMD is believed to have laid off 3-5% of its staff today.
AMD expects its Q2 revenue to decline from Q1 following a seasonal pattern. Margins are expected to improve due to the availability of the B3 Barcelona processor. The bottom line will be impacted by a “restructuring charge” the company will assume during the quarter.