Shares of chipmaker Advanced Micro Devices (NYSE: AMD) dipped slightly in Friday trading after the company posted a greater-than-expected first quarter loss and slower sales.
The computer and graphics chip manufacturer reported a first-quarter net loss of $611 million, or $1.11 a share, compared with a net profit of $184.5 million, or 38 cents a share a year ago. The quarter included acquisition and stock options charges of 26 cents, the company added. Sales dropped 7 percent to $1.23 billion compared with $1.33 billion in the first quarter of 2006.
The loss was more than twice the average loss of 48 cents expected by analysts polled by Thomson Financial. Revenue was expected to be $1.26 billion.
Shares of the Sunnyvale, Calif.-based firm fell 12 cents, or 0.84 percent, to close at $14.16 in late afternoon trading on New York Stock Exchange.
We are aggressively addressing the issues that led to our significant revenue decline, said Robert J. Rivet, AMDâ€™s chief financial officer. â€œWe are aligning our business model, capital expenditures and cost structure with the goal of accelerating our return to profitability. â€œ
AMD is locked in a fierce battle with its cross-town rival, Intel Corp. Recent price wars, and newer products have reversed the market share growth of AMD in 2007.
Intel now controls 80.2 percent of global microprocessor revenue during the first quarter of 2007, up 4.5 percentage points from 75.7 percent in the fourth quarter of 2006, according an estimate from iSuppli Corp.
Many believe the rivalry has also taken a toll on AMD's capital reserves.
We believe AMD will need to raise cash by September at the latest given its current cash burn run-rate and see no reason to own the shares, Doug Freedman of American Technology Research told clients in a note. AMD's fundamental risk far outweighs the potential for short-term trading gains.
AmTech reiterated its Sell rating with a $12 target price.