AMD promises profit by year-end

Posted on Tuesday, May 19 2009 @ 16:07 CEST by Thomas De Maesschalck
Last month AMD recorded its tenth consecutive quarterly loss, but CEO Dirk Meyer is optimistic about the future and believes that the company will be able to make a net profit by year's end, if the PC market sees a seasonal growth in the second half of the year.

Former AMD CEO Hector Ruiz promised a return to profitability by Q3 2008 in December 2007, but things have dramatically changed since then. In late 2007 the company projected a break-even point at a revenue of $8 billion, but this has been dropped to $5.5 billion due to cost-cutting plans and the joint-venture with ATIC that spun off AMD's fabs into GlobalFoundries. A quarterly revenue of $1.3 billion would be necessary to break even, about 10 percent more than what the company sold in the first quarter of this year.
"On the assumption we return to at least nominal seasonality from a growth perspective, we'll be in good shape to leave this year with a profit and free cash flow," he said. "I'm hopeful things will stabilize and we'll see a resumption of growth in the back half of the year."

Meyer was giving his first in-depth interview since the European Commission last week ruled that Intel Corp (INTC.O), the world's largest maker of microchips, had given illegal rebates to computer makers to try and depress AMD's market share.

Intel was ordered to end its practices with immediate effect. Meyer said he expected no "light switch" effect from the ruling, but was optimistic about the company's future.

"Over time, it's going to allow us to more successfully compete for business," he said.
GlobalFoundries on the other hand will not be profitable this year, an AMD spokeswoman told Reuters that the two companies have consolidated reporting and that consolidated report will not show a profit.

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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