AMD's Third Quarter Results

AMD today reported sales of $508,227,000 and a net loss of $254,171,000, for the quarter ended September 29, 2002. The net loss amounted to $0.74 per share, presented in accordance with generally accepted accounting principles (GAAP).

Third quarter sales declined by 34 percent from the third quarter of 2001 and by 15 percent from the second quarter of 2002. In the third quarter of 2001, AMD reported total sales of $765,870,000 and a net loss of $186,929,000, or $0.54 per share. Excluding the effects of restructuring and other special charges 1, the 2001 third quarter loss was $97,424,000, or $0.28 per share. In the second quarter of 2002, AMD reported sales of $600,299,000 and a net loss of $184,938,000, or $0.54 per share. For the first nine months of 2002, sales declined by 32 percent from the first nine months of 2001. AMD reported sales for the first nine months of 2002 of $2,010,599,000 and a net loss of $448,272,000 or $1.31 per share. For the first nine months of 2001, AMD reported sales of $2,939,881,000 and a net loss of $44,739,000, or $0.14 per share. Excluding the effects of restructuring and other special charges1, net income for the first nine months of 2001 was $44,766,000, or $0.13 per diluted share.

“The sequential decline in third quarter sales was primarily due to the aggressive actions we took in the PC supply chain to align our product mix with current customer and end-user demand, which has been less than we forecasted,” said Robert J. Rivet, AMD’s chief financial officer. “We took more aggressive action in the third quarter than in the second quarter, which masked the progress that AMD is achieving in the marketplace. The sell-through, that is, actual consumption of AMD microprocessors, was higher in the third quarter than in the second quarter. While AMD’s unit sales for desktop were hard hit by our actions, we believe we held market share in mobile unit sales and made substantial progress in server unit sales, increasing unit shipments by 17 percent. The improved alignment of inventory in the supply chain and the increased availability of the highest performing AMD Athlon XP™ processors on 130-nanometer technology should enable AMD and our customers to take advantage of the anticipated fourth quarter seasonal improvement in demand.

“Flash memory product sales grew in the third quarter based on the strength of the high-end mobile phone market, as bit demand for AMD Flash memory continued to increase.

“We are accelerating our strategy to reset our business model and lower our corporate breakeven point. We will begin to implement additional and aggressive actions in the fourth quarter that are expected to significantly reduce our quarterly breakeven point beginning in the first quarter of 2003.”