AMD Posts $358 Million Loss, Foresees Better Times Ahead

AMD posted its first quarter financial results late yesterday, and the news is far from good. Despite the fact that the chip manufacturer managed to push its Barcelona server processors on the market, the company continues to face catastrophic losses reported at $358 million.

Losses were expected, as Advanced Micro Devices had previously announced that the Q1 revenue will be significantly decreased as compared to the company's initial expectations. The first quarter ended March 29 and brought AMD $358 million losses. However, the sum includes $50 million in charges from the ATI acquisition in 2006.

However, AMD's performance significantly improved on the processor market, and managed to push both its server and desktop processors built on the Barcelona silicon. The CPU business accounted for 30 percent of the company's revenue. AMD claims that it saw "a challenging global environment for consumers" during the first quarter, despite the fact that the US market is facing a prolonged recession.

AMD also plans to re-consider its business and find other methods of cutting down on costs, including the confirmed 10 percent layoffs that have already started a few days ago. AMD's CEO Hector Ruiz even mentioned other non-core processor businesses, including mobile telephony and consumer electronics chips.

According to Bob Rivet, AMD's chief financial officer, the company badly needs to cut down its costs from around $1.7 billion to about $1.5 billion. However, the company is doing much better as compared to the last quarter, now that it has a fresh line of products to give sales a boost. More than that, AMD is planning to introduce its first mobile processor, built from scratch with energy-efficiency in mind.

All in all, this is the fifth quarter in which AMD posted losses of at least $350 million, and it practically bled money and market share all the way through. It does not take rocket science to find out that all the losses account for about $3.7 billion in about 15 months, and it's hardly to believe that the company managed to survive.

Ruiz ensured analysts that AMD will shift back to profit until the third quarter, but, in order to do so, it will have to trim its costs and boost its processor sales of course, luck is another secret ingredient in this cocktail.