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TMCNet:  AMD's 4th quarter earnings take a hit

[January 22, 2013]

AMD's 4th quarter earnings take a hit

Jan 23, 2013 (Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) -- Advanced Micro Devices Inc. warned investors ahead of time that its fourth quarter financial figures would likely be puny.

Turns out, the company was right.

The chipmaker, beset by weakness in the personal computer market, on Tuesday reported a net loss of $473 million, or 63 cents a share, on revenue of $1.16 billion. Revenue was down 32 percent from the same quarter a year ago, when the company reported a loss of $177 million, or 24 cents a share.

The company reported that it took a restructuring charge of $90 million during the quarter tied to its layoffs announced in October. And it took another $273 million charge tied to the change in its wafer supply agreement with GlobalFoundries Inc., its main manufacturing partner.

AMD said it expects even further revenue declines in the current quarter, in which it expects a drop of 9 percent, or about $100 million, from the fourth quarter.

AMD in October cut 15 percent of its global workforce, about 1,600 people, to rein in operating costs. Those job cuts included about 400 workers in Austin, reducing the company's area employment to about 2,000. Although the company's formal headquarters are in Sunnyvale, Calif., Austin is where most of its senior executives live and where much of its engineering work is done.

The first quarter is traditionally the weakest for PC-related companies.

Despite the problems, CEO Rory Read said his company is on the road to recovery through expense cutting, promising new products to be introduced in 2013 and entry into new growth markets.

"We are executing a turnaround that will take several quarters," Read said. "We expect continued choppiness in the PC market in the first half of 2013. And we will closely manage the business as we reset, restructure and ultimately transform AMD." The company expects to achieve profitability and positive cash flow in the second half of this year.

It expects that its quarterly operating expense will drop to $450 million a quarter by the third quarter. That compares with about $600 million at the start of 2012.

Read said the company expects to see revenue growth from shipments to makers of low-power dense servers, more powerful tablets and more sales to makers of embedded electronics, which are expected to include more video gaming consoles.

For all of 2012, AMD reported a net loss of nearly $1.2 billion, or $1.60 a share, on revenue of $5.4 billion. Revenue was down 17 percent from the year before.

The company ended the year with 10,340 employees worldwide, down 1,473, or 12 percent, from the year before.

___ (c)2013 Austin American-Statesman, Texas Visit Austin American-Statesman, Texas at www.statesman.com Distributed by MCT Information Services

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