AMD Reports Third Quarter Results
Year over year sales growth of 88 percent on sales of $954 million results in substantially reduced net loss of $0.09 per share
SUNNYVALE, CA --
AMD (NYSE:AMD) today reported sales of $954 million and a net loss of $31 million for the quarter ended September 28, 2003. The net loss amounted to $0.09 per share. Third quarter 2003 results include the operating results of FASL LLC, which was formed effective June 30, 2003 and is owned 60 percent by AMD and 40 percent by Fujitsu Limited.
Third quarter sales increased by 88 percent from the third quarter of 2002, and increased by 48 percent from the second quarter of 2003. In the third quarter of 2002, AMD reported total sales of $508 million and a net loss of $254 million, or $0.74 per share. In the second quarter of 2003, AMD reported sales of $645 million and a net loss of $140 million, or $0.40 per share.
“We delivered strong sales growth in our microprocessor and Flash memory business lines while tightly managing our expense structure,” said Robert J. Rivet, AMD’s chief financial officer. “Sales were up on a global basis reflecting increased demand in each of our major businesses and all geographic regions.”
“As a result of our sales growth and operational efficiencies, we reduced our third quarter operating loss by 76 percent to $30 million from $123 million last quarter. We more than doubled our positive EBITDA quarter-to-quarter to $277 million, generated positive cash flow from operations and ended the third quarter with a cash balance of $1.076 billion, up from $706 million in the second quarter.”
“In September, we successfully launched the AMD Athlon™ 64 processor family, the world’s first Windows®-compatible 64-bit PC processor. Initial demand has been very strong, particularly for the high-end AMD Athlon 64 FX model, targeted for the gaming, PC enthusiast and digital content creation markets. Similarly, demand for our AMD Opteron™ processor for servers and workstations continues to be strong. We believe these products strengthen our position to lead the industry’s transition to 64-bit computing.”
“With the successful launch of the Spansion™ Flash memory brand, we believe we are now the number one provider of NOR Flash memory solutions and are well positioned to achieve our strategic goal of being the number one provider of Flash memory solutions worldwide. We sampled the highest density monolithic NOR Flash memory product to date, the 512 Megabit Spansion Flash memory device. Customer acceptance of the Spansion brand has been outstanding, and the integration of AMD’s and Fujitsu’s Flash memory operations through FASL LLC are on a successful trajectory.”
Computation Products Group sales, which consists of microprocessors and chipsets, of $503 million were up 91 percent year-over-year and increased by 24 percent from the $406 million in the second quarter of 2003. CPG generated a profit in the third quarter due to solid growth across all processor product lines, an improved product mix and increased sales to our largest OEM customers.
Demand is accelerating for the AMD64 platform. IBM introduced its first AMD Opteron processor-based server and announced an AMD Opteron processor-based workstation. Sun Microsystems announced Java support for the AMD64 platform and disclosed plans to develop a version of its Solaris operating system for the AMD64 platform. In addition, Fujitsu Siemens is expected to launch AMD Opteron-based systems in the fourth quarter.
Flash memory sales of $424 million for the third quarter more than doubled from the second quarter of 2003 and the third quarter of 2002. The growth in the third quarter of 2003 was attributable to the effect of the June 30, 2003 consolidation of FASL LLC results of operations as well as strong organic growth of AMD Flash sales. The memory group operated at a loss in the third quarter.
Demand for Spansion Flash memory continued to be strong, increasing our market share gains and reflecting our leadership in the wireless segment. Sales of Spansion products featuring MirrorBit™ technology achieved record growth in the third quarter, expanding beyond wireless and into other market segments.
HIGHLIGHTS OF THE QUARTER
- AMD introduced the AMD Athlon 64 FX processor and AMD Athlon 64 processors for desktop and notebook PCs, the world’s first and only Windows compatible 64-bit PC processors.
- The AMD Athlon 64 FX processor, designed for gamers, PC enthusiasts and digital content creators, is the most technically advanced and highest performing PC processor in the world. PCs based on the AMD Athlon 64 FX processor enable a realistic, “cinematic computing” experience.
- Microsoft released a beta version of Windows XP 64-Bit Edition, designed specifically to support the AMD64 platform.
- Among 50 OEM system partners, Fujitsu, Fujitsu-Siemens, HP and NEC-CI presented systems based on the AMD Athlon 64 processor for shipment in the fourth quarter.
- AMD announced strong industry support and adoption of AMD Opteron microprocessors for servers and workstations.
- IBM selected the AMD Opteron processor Model 246 to power its IBM eServer 325 line and IBM announced availability of a 64-bit version of IBM DB2 for AMD Opteron processors.
- Los Alamos National Laboratory selected the AMD Opteron processor for two large-scale Linux clusters. The two clusters are designed to include more than 3,300 AMD Opteron processors.
- The University of Utah selected AMD Opteron processor-based systems for a new supercomputing cluster.
- Dawning Information Industry Corp Ltd. announced plans to launch a comprehensive series of AMD Opteron processor-based 1- and 2-way servers.
- Oracle announced plans for a 64-bit version Oracle9i Database on the AMD64 platform.
- H&R Block, a Fortune 500 company, announced it is standardizing its desktop platform on AMD Athlon XP processor-based systems from HP and plans to deploy more than 15,000 desktop systems companywide.
- AMD and Fujitsu Limited combined their Flash memory operations to form FASL LLC, which began marketing Flash memory solutions globally under the Spansion brand name.
- FASL LLC announced the sampling of a 512 Megabit Spansion Flash memory device, the highest density monolithic NOR Flash memory product to date.
- AMD acquired the majority of assets of National Semiconductor’s Information Appliance (IA) business unit. AMD’s Personal Connectivity Solutions group now features the Geode™ family of integrated silicon and system solutions designed with embedded x86 processors for thin client, smart display and set-top box markets among others.
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. AMD’s current outlook for the fourth quarter of 2003 is based on the following projections.
- AMD believes that sales in the fourth quarter will increase based on the following:
- AMD expects microprocessor sales to increase based on normal industry seasonality and growing demand for the company’s enhanced portfolio of AMD64 processors.
- AMD expects Flash memory sales to increase based on normal seasonality and increasing customer acceptance of MirrorBit technology.
- AMD anticipates its fourth quarter operating costs to remain approximately $1 billion depending on volume and mix.
AMD will hold a conference call for the financial community at 2:30 PM Pacific Time today to discuss third 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
. The web-cast will be available for ten days 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 fourth quarter of 2003; that Intel Corporation’s 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 processor sales plans; that demand for personal computers and, in turn, demand for the company’s processors will be lower than currently expected; that the sales of AMD processors will not follow seasonal patterns that normally apply in the fourth quarter; that demand for the company’s Flash memory products will be lower than currently expected, particularly in the high-end cellular telephone sector, and that we will not be able to increase our Flash memory market share; customer acceptance of MirrorBit technology will not continue to increase; that we will not continue to be successful integrating the Flash operations of FASL LLC, or be able to achieve or sustain any benefit from its creation; that the company may not achieve its current product and technology introduction schedules; and that solutions providers will not timely provide the infrastructure, including operating systems and applications, to support the Company’s AMD64 technology. 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 Annual Report on Form 10-K for the year ended December 29, 2002, and the Quarterly Report on Form 10-Q for the quarter ended June 29, 2003.
Founded in 1969 and based in Sunnyvale, California, 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 Standard & Poor’s 500 company, produces microprocessors, Flash memory devices, and silicon-based solutions for communications and networking applications.