July 19 (Bloomberg) -- Advanced Micro Devices Inc., the second-largest maker of personal-computer processors, reported a third consecutive quarterly loss after cutting prices to compete with Intel Corp.
The second-quarter net loss was $600 million, or $1.09 a share, compared with a profit of $88.8 million, or 18 cents a share, a year earlier, the Sunnyvale, California-based company said today in a statement distributed by Business Wire. Sales rose 13.3 percent to $1.38 billion.
Advanced Micro won market share from Intel last year and is now discounting chips to keep hold of those gains. Price cuts, the burden of paying for an acquisition of ATI Technologies Inc. and delays to a new server chip have prompted analysts to predict that the company won't have a profit until 2009.
``Not only has AMD fallen behind Intel, but they've fallen behind their own road map,'' said Mark Mowrey, an analyst at Al Frank Asset Management in Laguna Beach, California. His firm oversees $850 million including Advanced Micro stock. ``They got a little bit ahead of themselves last year thinking that their technology gains were going to continue.''
Advanced Micro's shares rose 32 cents, or 2.1 percent, to $15.78 at 4 p.m. in New York Stock Exchange composite trading. The stock has fallen 22 percent this year.
The company was projected to report a net loss of 88 cents a share and sales of $1.25 billion, according to the average of estimates in a Bloomberg survey.
Chief Executive Officer Hector Ruiz has used Advanced Micro's Opteron chip for computer servers to show customers such as Dell Inc. that the company is more than just a provider of cheap parts.
A new version of Opteron, called Barcelona, will go on sale next month. That's behind schedule, according to analysts including Chris Danely at JPMorgan Chase & Co. Analysts also said the chip doesn't perform as fast as was expected, something Advanced Micro said it will fix by the end of the year.
Earlier this week, Intel said that second-quarter profit rose 44 percent on its first sales increase since 2005. While earnings improved, Intel said lower prices from Advanced Micro contributed to a decline in profitability.
Advanced Micro ended 2006 with 25 percent of the market for PC microprocessors, its highest level in 11 years, according to Mercury Research in Cave Creek, Arizona. The company lost 7 points of share in the first three months of 2007.
No one cares about sales... they care about margins! The margins clearly are not doing well.