AMD Reports Second Quarter Results
—Cites Weak PC Market Demand; Improving Flash Outlook— Financial Statements AMD Selected Corporate Data
SUNNYVALE, CA --
AMD (NYSE:AMD) today reported sales of $600,299,000 and a net loss of $184,938,000, for the quarter ended June 30, 2002. The net loss amounted to $0.54 per share.
Second quarter sales declined by 39 percent from the second quarter of 2001 and by 33 percent from the first quarter of 2002. In the second quarter of 2001, AMD reported total sales of $985,264,000 and net income of $17,352,000, or $0.05 per diluted share. In the first quarter of 2002, AMD reported sales of $902,073,000 and a net loss of $9,163,000, or $0.03 per share.
For the first six months of 2002, sales declined by 31 percent from the first six months of 2001. AMD reported sales of $1,502,372,000 and a net loss of $194,101,000, or $0.57 per share. For the first six months of 2001, AMD reported sales of $2,174,011,000 and net income of $142,189,000, or $0.43 per diluted share.
“A weaker than expected PC market, particularly in North America and Europe, resulted in soft microprocessor demand in a highly competitive market,” said Robert J. Rivet, AMD’s chief financial officer. “Flash memory product sales improved in the second quarter based on the strength of the high-end mobile phone market, as consumers are buying feature-rich phones built with high-density, high performance flash memory. The successful introduction of AMD MirrorBit™ technology has given us competitive momentum.”
PC processor sales of $380 million for the quarter fell by 35 percent compared to $588 million in the second quarter of 2001. Processor sales declined by 44 percent from the $684 million reported in the first quarter of 2002. Desktop unit sales were down while mobile processor unit sales were flat.
AMD lowered processor inventories in the PC supply chain in the second quarter to help better position its customers in the current market environment.
AMD has completed its conversion from 180-nanometer to 130-nanometer technology. The Company’s Fab 30 plant in Dresden, Germany is now producing 100 percent of its wafer starts in 130-nanometer technology, and will have all wafer outs in 130-nanometer technology in the fourth quarter. AMD is the only microprocessor company with all of its microprocessor production in 130-nanometer technology.
Development roadmaps for AMD Athlon™ and AMD Opteron™ PC processors based on Hammer technology continue on schedule. AMD plans to begin production shipments of AMD Athlon PC processors based on Hammer technology in the fourth quarter.
Second quarter sales of AMD memory products were down 45 percent compared to the second quarter of 2001, and were up nine percent from the first quarter of 2002. Memory sales were $175 million in the second quarter compared with $316 million in second quarter of 2001 and $160 million in the first quarter of 2002. AMD flash memory unit shipments increased in the second quarter of 2002 and bit shipments were a record.
Additional Highlights of the Quarter
- In April, AMD announced that it is collaborating with Microsoft to incorporate 64-bit support for AMD Athlon and AMD Opteron processors based on Hammer technology into the Windows® operating system. AMD demonstrated at its annual shareholders meeting an AMD Opteron dual processor-based server running a developmental 64-bit version of Windows.
- In April, AMD announced the AMD Athlon XP processor, manufactured on state-of-the-art 130-nanometer technology.
- In April, AMD announced the introduction of the Alchemy™ Au1100™ processor, targeting the non-PC mobile Internet appliance market, such as web pads, telematics, and PDAs, offering an industry-leading combination of high performance, low power and high integration.
- In May, AMD announced the Fab 25 manufacturing facility in Austin, Texas is in volume production of Flash memory devices utilizing 170-nanometer technology.
- In May, AMD, Infineon Technologies AG and DuPont Photomasks, Inc. announced plans to establish and operate a new advanced photomask facility in Dresden, Germany.
- Also in May, AMD announced that it will be providing assistance to UNETE (Union de Empresarios para la Tecnologia en la Educacion, A.C.), a private organization in Mexico dedicated to building computer labs in Mexican schools. Hector Ruiz, president and CEO of AMD, met with President Vicente Fox of Mexico where the two discussed AMD’s desire to help bring computer technology to the classrooms of Mexico and AMD’s increasing commitment to the IT industry in Mexico.
- In June at Computex Taipei 2002, AMD demonstrated a four-way multiprocessor server, based on the AMD Opteron processor. The demonstration marked the first-ever public showing of a four-way multiprocessor platform by AMD, and illustrated AMD’s growing performance and competitiveness in addressing the server market. Also at Computex Taipei, more than 35 leading hardware infrastructure vendors announced plans to support AMD Opteron and AMD Athlon processors based on Hammer technology.
- In June, the AMD Athlon XP processor won the 2002 PC World World Class Award for Computer Product of the Year. In all, the AMD Athlon processor family and systems based on such processors have won more than 100 awards worldwide.
AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. Economic and industry conditions remain uncertain, and continue to make it particularly difficult to forecast product demand. The company’s current outlook for the third quarter is based on the following projections:
- The company expects sequential sales growth of flash memory devices.
- The company expects unit sales of PC processors will follow seasonal patterns, which generally show sequential increases from second quarter levels.
AMD aggregate sales are currently expected to improve modestly in the third quarter compared to the second quarter. This forecast is dependent upon demand and PC processor pricing patterns in a weak PC market and the rate of growth in an improving flash memory market. At these sales levels, AMD expects to report a loss in the third quarter.
AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss second quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its web site at http://www.amd.com or http://www.StreetEvents.com. The web-cast will be available for two weeks after the conference call.
This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainty that could cause actual results to differ materially from current expectations. Risks include the possibility that global business and economic conditions will worsen resulting in lower than currently expected sales in the third quarter of 2002; that Intel Corporation pricing, marketing programs, product bundling, new product introductions or other activities targeting the company's processor business will prevent attainment of the company's current PC processor sales plans; that demand for personal computers and, in turn, demand for the company's PC processors will be lower than currently expected; that the sales of PC processors will not follow seasonal patterns and increase from second quarter levels; that the company will not continue to be successful in ramping production of the company's AMD Athlon XP processors on 130-nanometer technology in Fab 30 in Dresden, Germany, on the current schedule; that demand for the company's flash memory products will be lower than currently expected, particularly in the cellular telephone sector; that the company will not achieve sequential growth in sales of flash memory devices; and that the company may not achieve its current product and technology introduction schedules. We urge investors to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the report on Form 10-K for the year ended December 30, 2001 and the report on Form 10-Q for the quarter ended March 31, 2002.
AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets with manufacturing facilities in the United States, Europe, Japan, and Asia. AMD, a Fortune 500 and Standard & Poor’s 500 company, produces microprocessors, Flash memory devices, and support circuitry for communications and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of $3.9 billion in 2001. (NYSE: AMD).
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