AMD Re-Assessing Competitive Conditions

AMD Re-Assessing Competitive Conditions

SUNNYVALE, CA -- 2/4/1999 -- AMD announced today that, based on a re-assessment of competitive conditions, the company could incur an operating loss in the current quarter.

"Design enhancements to increase the yield of higher-speed versions of the AMD-K6®-2 processor with 3DNow!™ technology have been successfully implemented," said W.J. Sanders, chairman and chief executive officer of AMD. "We will not, however, realize the benefits of the change in production output until the back half of the current quarter.

"In the light of Intel's recent pull-in of its February 28 price reductions to February 8, and pending product announcements, we are re-assessing our competitive response. The likely outcome is that in spite of the planned richer mix, we will be unable to increase our microprocessor average selling prices in the current quarter. This will put additional pressure on our gross margins. In the face of planned R&D spending on technology development through the Motorola alliance and at our new Dresden megafab, the company could incur an operating loss in the current quarter," Sanders concluded.