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AMD processor naming convention.
- Thread starter neocon
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AMD is having a bad time at the moment.
Price war leads AMD to plan cuts
By Kevin Allison in San Francisco and Daniel Pimlott in New,York
Published: April 10 2007 03:00 | Last updated: April 10 2007 03:00
A bruising price war continued to take its toll on AMD yesterday as the world's second-biggest microprocessor maker said it expected sales to undershoot forecasts by more than 20 per cent in the first quarter.
Shares in AMD jumped more than 5 per cent, however, as the company announced $500m in cost cuts designed to help it better compete with industry rival Intel.
AMD expects to record sales of about $1.23bn in the first fiscal quarter, below the $1.6bn-$1.7bn it had originally forecast. Investors had been bracing for the poor first-quarter performance since last month, when the chipmaker warned that it was unlikely to meet its sales targets. "Revenues declined sharply quarter-over-quarter for the Computing Solutions segment, primarily due to lower overall average selling prices and significantly lower unit sales, especially in the resale channel," the company said in a statement.
AMD's stock price rose 3.8 per cent to $13.35 in New York yesterday. AMD's shares had fallen sharply from a high of $40.54 in February last year as tough price competition and new processors from Intel cut into margins and sales.
AMD said it planned to "restructure its business model to increase operational efficiencies and lower the operating cost structure". The company said it would slash capital expenditure by $500m this year. It said it would cut discretionary expenses and restrict recruitment to critical positions.
Intel and AMD together dominate the market for the x86 processors that power most PCs. But Intel has traditionally held the lion's share of the x86 market, providing the chips for four out of every five PCs sold.
AMD, whose manufacturing costs are higher than Intel's, has been hit hard by the price war between the two companies. Although AMD gained market share against its bigger rival in 2006, Intel has benefited from its own round of cost cuts and the launch of a new line of microprocessors.
In January, AMD reported a $574m loss for the fourth quarter, due to shrinking margins and costs associated with its $5.4bn purchase of ATI, a graphics chip maker.
A fall in average selling prices has put pressure on margins across the chip industry. AMD last quarter announced its gross margins had dipped to 40 per cent, compared with 52 per cent in the third quarter and 57 per cent a year earlier.
AMD reports its full results on April 19.
Price war leads AMD to plan cuts
By Kevin Allison in San Francisco and Daniel Pimlott in New,York
Published: April 10 2007 03:00 | Last updated: April 10 2007 03:00
A bruising price war continued to take its toll on AMD yesterday as the world's second-biggest microprocessor maker said it expected sales to undershoot forecasts by more than 20 per cent in the first quarter.
Shares in AMD jumped more than 5 per cent, however, as the company announced $500m in cost cuts designed to help it better compete with industry rival Intel.
AMD expects to record sales of about $1.23bn in the first fiscal quarter, below the $1.6bn-$1.7bn it had originally forecast. Investors had been bracing for the poor first-quarter performance since last month, when the chipmaker warned that it was unlikely to meet its sales targets. "Revenues declined sharply quarter-over-quarter for the Computing Solutions segment, primarily due to lower overall average selling prices and significantly lower unit sales, especially in the resale channel," the company said in a statement.
AMD's stock price rose 3.8 per cent to $13.35 in New York yesterday. AMD's shares had fallen sharply from a high of $40.54 in February last year as tough price competition and new processors from Intel cut into margins and sales.
AMD said it planned to "restructure its business model to increase operational efficiencies and lower the operating cost structure". The company said it would slash capital expenditure by $500m this year. It said it would cut discretionary expenses and restrict recruitment to critical positions.
Intel and AMD together dominate the market for the x86 processors that power most PCs. But Intel has traditionally held the lion's share of the x86 market, providing the chips for four out of every five PCs sold.
AMD, whose manufacturing costs are higher than Intel's, has been hit hard by the price war between the two companies. Although AMD gained market share against its bigger rival in 2006, Intel has benefited from its own round of cost cuts and the launch of a new line of microprocessors.
In January, AMD reported a $574m loss for the fourth quarter, due to shrinking margins and costs associated with its $5.4bn purchase of ATI, a graphics chip maker.
A fall in average selling prices has put pressure on margins across the chip industry. AMD last quarter announced its gross margins had dipped to 40 per cent, compared with 52 per cent in the third quarter and 57 per cent a year earlier.
AMD reports its full results on April 19.