AMD expected to report large fourth-quarter loss

Posted on Friday, January 16 2009 @ 0:05 CET by Thomas De Maesschalck
Analysts polled by FactSet Research expect AMD will report another big loss when it reports its fourth quarter financial results next week. The analysts estimate AMD will report a loss of 54 cents a share, or roughly $328.6 million, on a revenue of $1.24 billion.

These expectations are a far cry from the return to profitability in the second half of 2008 former AMD CEO Hector Ruiz promised in 2007, but the company has had a really hard time and the economic crisis hasn't done it any good either.
"We don't expect a recovery in microprocessor demand near-term, resulting in a 24% decline in AMD's 2009 revenue and March period sales falling short of consensus," analyst John Dryden of Charter Equity Research wrote in a research note.

The Sunnyvale, Calif.-based company is struggling with broader economic issues as it goes through a major transformation, highlighted by the plan to spin off its manufacturing facilities in a strategy dubbed "asset light."

AMD is in the process of creating a new manufacturing firm, called the Foundry Company, in a joint venture with the Advanced Technology Investment Co. of Abu Dhabi and the Mubadala Development Co. Analysts say the plan could help ease AMD's financial burdens.

"The asset-light restructuring can't come soon enough to improve the balance sheet (debt reduction, cash infusion), reduce headcount to support lower PC demand and provide a return to operating profitability in 2010," Dryden said. "We believe market conditions have sufficiently deteriorated since the company's analyst meeting in November."
Source: MarketWatch

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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