AMD Reports First Quarter Results
-AMD Sales Grow on Record PC Processor Sales -
SUNNYVALE, CA --
AMD today reported sales of $1,188,747,000 and net income of $124,837,000 for the quarter ended April 1, 2001. Net income amounted to $0.37 per diluted share. The company reported record sales and record unit shipments of PC processors, led by strong sales of its seventh-generation AMD Athlon™ and AMD Duron™ processors.
Total sales grew by 9 percent over the like period of 2000 while increasing by 1 percent from the immediate-prior quarter. In the first quarter of 2000, AMD reported sales of $1,092,029,000 and net income of $189,349,000, or $0.55 per diluted share. The company noted the tax rate for the just-completed quarter was 32 percent versus zero in the comparable period of 2000. In the fourth quarter of 2000, AMD reported sales of $1,175,172,000, and net income of $177,968,000, or $0.53 per diluted share, with a 15 percent tax rate.
AMD sold more than 7.3 million PC processors, including 6.5 million seventh-generation AMD Athlon™ and Duron™ processors. Average selling prices (ASPs) increased from the immediate-prior quarter on the richer product mix. Total PC processor sales, at $661 million, increased 17 percent from both the comparable quarter of 2000 and the immediate-prior quarter.
"AMD had an excellent quarter in a challenging economic environment," said W.J. Sanders III, chairman and chief executive officer. "The superiority of our seventh-generation PC processors enabled AMD to achieve record PC processor sales in both dollars and units even as the industry worked through inventory issues in a softening economy. Our success in the PC processor arena reflects continuing excellent execution as well as our ability to supply products with more delivered performance that enhance the competitiveness of our customers.
"New product introductions during the quarter strengthened and broadened our PC processor portfolio," Sanders continued. "We commenced volume shipments of our newest, power-managed AMD Athlon™ processors, code-named 'Palomino,' for the mobile PC market segment. Palomino processors feature an enhanced core and our proprietary PowerNow! technology, which dynamically adjusts the frequency and voltage of the processor based on the performance demands of the software, enabling a significant reduction in power consumption in mobile applications. PowerNow! technology is just one example of the better ideas from AMD that have elevated us to contention with IBM for the number two global ranking in U.S. patent issuances relating to large-scale integration processes and devices in 2000.
"AMD also introduced 1.3-gigahertz (GHz) and 1.33-GHz desktop versions of the AMD Athlon™ processor in the first quarter. Earlier this month, AMD introduced a 900-megahertz version of the AMD Duron™ processor, the industry's highest-performance processor for the value segment of the desktop market.
"With these additions to our PC processor offerings, we have a compelling solution for the performance mobile PC market where we have heretofore lacked a competitive offering while extending our performance leadership for desktop PC applications," Sanders continued.
"Sales of flash memory products, reflecting a sharp decline in demand from the communications sector of the economy, declined by approximately 10 percent sequentially to $411 million," Sanders continued. "Our broad product offering, excellent relationships with major customers, and long-term purchase agreements helped to mitigate the effects of this challenging environment and achieve 26 percent growth in flash memory product sales over the like period of 2000.
"We gained market share last quarter in both PC processors and flash memory, the focal points of our growth strategy," Sanders said.
"Sales of our seventh-generation processors (AMD Athlon™ and AMD Duron™ processors) grew 27 percent sequentially and 126 percent year-on-year. Demand for our highest-performance AMD Athlon™ processors remained strong and we shipped more than 2 million 1-GHz and faster devices. Going forward, we plan to continue our aggressive production ramp in Fab 30 in Dresden, which will be the source of our highest-performance AMD Athlon™ processors, including the new power-managed versions," Sanders concluded.
The company's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially. The company's current outlook is based on the following projections.
The company currently expects that, in the seasonally slow second quarter for PC sales, the enhanced competitive position of AMD-based solutions will enable maintenance of PC processor unit sales at near-record levels comprised totally of seventh-generation products. The company currently expects PC industry unit growth in the high single-digit range for 2001 as a whole.
Uncertainties regarding the level of demand for flash memory products in a continuing soft communications sector makes forecasting memory product sales extremely difficult. The company currently projects that second quarter sales of flash memory products will decline sequentially.
AMD's other IC products and foundry services, which currently account for less than 10 percent of corporate revenues, will continue their decline both in absolute terms and as a percentage of total revenues.
Accordingly, in this uncertain climate, AMD expects that overall second quarter revenues could decline by as much as 10 percent sequentially, depending on market conditions.
For the year as a whole, on modest sales growth in a declining market, the company expects to earn $1.50 per diluted share, consistent with First Call consensus earnings estimates.
AMD will hold a teleconference for the financial community at 2:30 PM Pacific Standard Time today to discuss first-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.streetfusion.com. The webcast will be available for two weeks after the teleconference.
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. There can be no assurance that demand for the company's products will continue at currently expected levels, that the company will grow sales for the year, or that it will meet earnings per share estimates.
Risks also include the possibility that global business and economic conditions will worsen; that demand for personal computers and, in turn, demand for the company's PC processors will be lower than currently expected; that Intel Corporation pricing, marketing programs, 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 the company will not continue to be successful in ramping production of the company's highest performance processors in Fab 30; that the company will not be able to produce AMD Athlon™ and AMD Duron™ processors in the volume, speed mix or with the feature set necessary to meet market requirements and the company's current plans and goals; that third parties may not provide timely or adequate infrastructure solutions to support the AMD Athlon™ and AMD Duron™ processors; and that changes in customer needs and the product introductions and capacity expansion of competitors will effect the demand for the company's flash memory products. 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 31, 2000.