14 DAY TRIAL // Sunnyvale, California-based Advanced Micro Devices announced yesterday its fourth-quarter financial performance, reporting a steep loss and lower revenue, all of which have been considered effects of the low global economy.
According to the reported figures, the chip maker has posted a loss of US$1.42 billion for the quarter ended December 27, slightly better than the $1.77 billion reported a year earlier. The company's revenue was $1.16 billion, down from $1.74 billion reported in the fourth quarter of 2007. According to the chip maker, its quarterly sales were down to 33 percent from the previous quarter, which further indicates that major companies in the IT industry are also struggling with the low consumer demand spread across all markets. Only last week, Intel, the global leading manufacturer of computer processors, reported that its sales were down 23 percent in the quarter.
AMD said that the reported loss included a goodwill impairment charge of $684 million, related to the company's acquisition of graphics card maker, ATI Technologies, in 2006. Apparently, losses would have been of just $418 million, if we excluded the aforementioned charge and other on-time charges.
“The fourth quarter is going to be remembered for the severe stresses placed on the global economy and on our industry,” AMD president and CEO Dirk Meyer said in a conference call to discuss the results. “The global economic environment led to a softening in end-user demand for PCs and servers in what is usually the year's strongest quarter.”
With the announcement, AMD also said that it expected revenue from the first quarter in 2009 to be lower than in the quarter that just ended, with the company citing “corrections in the supply chain,” which basically translates into a lower demand coming from computer makers, which are trying to clear out excess inventory. AMD's shares have dropped more than 50 percent since the beginning of the fourth quarter – only on Thursday the shares were down more than 10 percent, falling at 23 cents and closing at $2.02, before the release of the report. In the graphics business, the chip maker announced that it recorded an operating loss of $10 million on a $270 million revenue, down 30 percent from the revenue in the fourth quarter.
Prior to the announcement of the Q4 financial results, the company announced that it would cut more than 1100 jobs and lower salaries of its workers, in an attempt to minimize the effects of the low global economy. The newly-announced job cuts follow the 2,100 layoffs announced last year.