Advanced Micro Devices posted a third-quarter loss of $128 million, lower than Wall Street projections, while also reporting revenue that beat expectations.
The loss, at 18 cents a share, compares with a loss of $134 million, or 22 cents a share, for the same period last year. Analysts had expected a loss of 42 cents a share.
Revenue was $1.4 billion, an 18 percent increase over the second quarter of this year, while falling 22 percent compared to the third quarter of 2008. Forecasts had called for only $1.3 billion in revenue.
"There was strength in notebooks and China," said Dirk Meyer, AMD president and CEO, speaking during the company's earnings conference call on Thursday afternoon. He added that there is "an increased focus on small form factor" laptops at AMD and that upcoming inexpensive, thin laptops based on AMD processors should be priced lower than Intel-based offerings. And Meyer said AMD will broaden its processor offerings in this area going into the holiday season.
Meyer also spoke to AMD's future 32-nanometer silicon. Products codenamed "Fusion" that combine the graphics function with the main processor will be based on 32-nanometer technology and ship in the second half of 2010, Meyer said.
AMD is currently moving most of its production to 45-nanometer-based processors. Intel, on the other hand, will begin to move to 32-nanometer by the end of this year. Generally, the small the geometry, the faster and more power-efficient the chip is.
Addressing graphics processing units (GPUs), Meyer said that its recently-introduced 5800 series products have been well received but that the average selling prices of GPUs were down compared to the prior quarter and are still below central processing units or CPUs, which are higher.
"Growth in microprocessor and graphics unit shipments drove an 18 percent sequential revenue increase, while improved factory utilization rates, higher microprocessor average selling price, and an increase in 45 (nanometer) product shipments resulted in a gross margin improvement from the prior quarter," Meyer said in a statement.
AMD expects its product company (non-manufacturing-related) revenue to be up modestly for the fourth quarter of 2009.
AMD was the world's second-largest seller of microprocessors in the second quarter of 2009 with an 11.9 percent share of global revenue behind market-leader Intel, according to market researcher iSuppli.
Updated at 3:30 p.m. PDT: adding comments from earnings conference call.
During Intel's earnings conference call on Tuesday, CEO Paul Otellini talked about the growth of notebook PCs versus Netbooks, and Windows 7 adoption in business, among other topics.
Otellini was quick to trumpet the fact that its mainstream notebook business beat Netbook growth. "We saw the sequential unit growth rate of notebook processors and chipsets actually exceed the growth rate of Atom processors and chipsets," he said.
Later in the call, Otellini said: "While Atom and Netbooks are important growth drivers for us, our traditional notebook business remains one of the primary drivers of revenue growth and we expect that to continue in the future."
Otellini, again in the call, expanded on this theme, adding that while Netbooks should see significant growth in 2010 over 2009, the notebook market is flourishing. "We're still bullish (on Netbooks) but what we've seen this quarter though is that the notebook market is alive and well and Netbooks are market-additive for Intel and the industry," he said. "Market-additive" is code for an ancillary product, not a mainstream product.
Intel CEO expects more attractive ultra-thin laptops in the coming months
(Credit: Intel )He also addressed the new category of ultrathin laptops, which are inexpensive laptops--between $500 and $900--that slot in above Netbooks. "The bulk of the units that have shipped to date were single-core versions of the products. Late last quarter, we introduced the dual-core version of those products. You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter."
Responding to analyst questions, Otellini also addressed Windows 7 adoption in business. "We see a lot of interest at corporations around Win 7 and the new Nehalem-based (PC models)," he said, referring to Intel's new Nehalem-based Core "i" series of processors. "They're made for each other in terms of the performance and power management and security characteristics."
He continued: "I would expect that the (corporate Windows 7) evaluation process will happen over the rest of this year and we'll start seeing corporate purchases on a refresh basis begin in 2010."
Here's a rundown of other comments:
- Consumer segment strong: "The strength in our business remains primarily consumer driven with broad-based demand across all geographies."--Otellini.
- Growth phase: Refuting a question about Intel becoming "smaller" next year: "We're finished with the cutting phase of our efficiency efforts and now in the growth phase of that efficiency efforts."--Chief Financial Officer Stacy Smith.
- Inventory hubs: At large PC customers, component inventories levels are at roughly half of the peak level late last year and approximately flat throughout 2009. Intel has a better handle on inventories now using a mechanism called inventory hubs. "We hold the inventory for our large OEM customers, who then pull inventory only if needed...This give us increased visibility into real-time production levels."--Otellini
- Nehalem server processors: (dual-processor). "It's not so much an upgrade cycle that's driving the volume right now, it's economics of the data center. People are looking at swapping eight to nine older-generation servers for a single Nehalem server."--Otellini.
Updated at 3:10 p.m. PDT: adding comments from CEO Paul Otellini and CFO Stacy Smith.
Intel's third-quarter revenue jumped $1.4 billion over the second quarter, though year-to-year revenue and profit comparisons were down.
The world's largest chipmaker is struggling to lead the PC industry out of a brutal downturn that saw demand collapse earlier in the year.
Revenue came in at $9.4 billion, beating Wall Street expectations, which hovered at just more than $9 billion. Revenue, however, was down from the $10.2 billion reported in the year-earlier period.
On a year over year basis, revenue for the third quarter was down 8 percent, Intel said in a statement, adding that this was an improvement over the 15 percent and 26 percent year over year declines in the second and first quarters respectively.
Intel shares were up more than 5 percent after hours, trading as high as $21.45 form a regular closing price of $20.49.
"Overall (corporate) enterprise remains weak," said CEO Paul Otellini in the company's earnings conference call.
Profits were $1.9 billion, or 33 cents per share, down from the third quarter of last year, when Intel posted a profit of $2.0 billion, or 35 cents a share. But the 33 cents beat analyst forecasts, which were 28 cents per share.
The chipmaker's gross margin for the quarter, a crucial earnings indicator, was 57.6 percent, higher than the company was projecting.
Looking ahead, Intel expects revenue to hit $10.1 billion, "plus or minus $400 million," in the fourth quarter, and gross margin to improve to 62 percent, plus or minus 3 percentage points.
Intel also said the average selling price for microprocessors was slightly down sequentially.
Inventories were also down $315 million sequentially. Intel chief financial officer Stacy Smith said inventories were a little lower than Intel would like and that Intel intends to increase inventories in the fourth quarter.
Quick: Name an Intel rival whose name begins with an "A" and is abbreviated by three letters.
AMD? How about ARM. Even with attention focused on the immediate impact of Intel's earnings coming Tuesday afternoon, pesky questions linger about a likely future in which U.K.-based ARM and its satellite of chip and device makers pose a growing competitive threat. Maybe more so than Intel's traditional rival, Advanced Micro Devices.
Two recent statements from analysts argue that the camp of companies that make chips based on designs from ARM will dictate future competition in mobile computing. These companies include Qualcomm, Texas Instruments, Samsung, and, in the future, Apple.
New Tripoli, Penn.-based The Information Network said late last month that ARM processors, not Intel's Atom chip, will gain the largest chunk of the Netbook market in 2012--about a 55 percent market share. Netbooks are small, ultralight laptops typically priced under $400.
The market research firm argues that small ARM-based laptops, dubbed "smartbooks," will thrive under subsidized services from telephone carriers "modeled after Hewlett-Packard (cheap printer, expensive ink) and the mobile service providers (cheap cellphone, expensive monthly wireless charge)."
And on Monday EE Times cited analyst Didier Scemama, with ABN AMRO Bank NV, who said there is a "shift towards computing based on ARM-Linux and away from Intel-Microsoft over the next technology cycle," which he said would begin in the second half of 2010, because ARM processors would match Intel chips in performance and beat them on power consumption and possibly cost.
The analyst also postulated that eventually Microsoft would offer a "high-level Windows operating system" running on ARM chips and that ARM could capture 30 percent of the notebook PC processor market by 2014. He speculated, too, that ARM might be taken over by the chip companies that are its licensees.
All of this competition from ARM might be good for consumers but not necessarily for future Intel revenue streams. A report last week from DisplaySearch said that the growing market share of Netbooks has pulled down revenue in the portable PC market due to a low average selling price. Revenues for Netbooks rose to $3 billion in the second quarter of the year, jumping 264 percent over the second quarter of 2008, while traditional notebooks saw second-quarter sales fall to $23.2 billion, a 14 percent decline from the second quarter of 2008, according to DisplaySearch.
These are all just forecasts, of course, and pricier mainstream Intel-based laptops running Microsoft or Apple operating systems today account for the vast majority of the market. Moreover, other analysts argue that consumers will not necessarily flee en masse to ARM-based laptops as it will be difficult to displace a longstanding consumer preference for Intel-based machines running Windows.
Advanced Micro Devices on Tuesday reported a net second-quarter loss of $330 million as the chipmaker offered a muted outlook for the rest of the year.
The $330 million loss, or 49 cents per share, compares favorably to a $1.2 billion loss, or $1.97 per share, in the same period last year. Analysts had forecast a loss of 47 cents per share.
Revenue of $1.18 was flat compared to the first quarter of 2009 and decreased 13 percent compared to the second quarter of 2008.
AMD expects revenue for the product company--which excludes the spun-off manufacturing operations--to be up slightly for the third quarter of 2009, a less positive outlook than the one Intel offered last week.
"Gross margin was disappointing," Dirk Meyer, AMD's president and CEO, said in a statement, referring to a crucial profit indicator. Gross margin was 37 percent compared to first-quarter gross margin of 43 percent. (Non-GAAP gross margin was 27 percent versus 35 percent in the prior quarter.)
But Meyer added: "New platform, microprocessor, and graphics introductions planned for the second half of 2009 position us well to improve margins and meet our financial goals for the year."
During the earnings conference call, Meyer spoke about the growth outlook for the rest of the year. "While we expect a return to sequential growth, I think it's too early to say, given the overall weakness in the macro economy, that we're going to return to normal seasonal growth," he said.
As a backdrop to the results, marker researcher iSuppli estimates that global PC unit shipments in the second quarter decreased by 5.2 percent compared to the same period in 2008. Shipments in the second quarter of 2009 declined to 66.5 million units, down from 70.2 million in the second quarter of 2008.
On the back of Intel's better-than-expected financials, an iSuppli analyst said Monday that chip inventories will recover, driving up sales in the second half of the year.
Following positive financial guidance from Intel and other chipmakers, global semiconductor revenue will increase by a sharp 10.4 percent in the third quarter and by 4.9 percent in the fourth quarter, according to Carlo Ciriello, a financial analyst for iSuppli.
This expected recovery comes on the heels of four consecutive quarters of chip inventory declines, which took their sharpest dive in the first quarter of this year, plunging by 15.1 percent. iSuppli forecasts that second-half inventories will increase modestly by 5.1 percent in the third quarter and 1 percent in the fourth.
"Falling demand in the first half of 2009 prompted a swift inventory correction among chip suppliers," said Ciriello, in a statement. "Companies dialed down (factory) utilization levels and cleared swaths of inventory by reducing Average Selling Prices (ASPs) in anticipation of continued depressed demand," he added, describing how the sluggish market conditions in the first half should set the stage for an inventory correction in the second half.
FBR Capital Markets analyst Craig Berger said in a research note Monday that because Intel's forecasts were much better than investors anticipated three months ago, he expects global demand to recover as "the world gets back to normal." Berger's comments appeared in the Wall Street Journal on Monday.
Updated at 3:45 p.m. PDT: adding comments from earnings conference call.
Intel on Tuesday posted a second-quarter loss of $398 million, stung by a fine imposed by the European Union, but the chipmaker is optimistic about the second half of the year as it beat analyst estimates.
The loss of 7 cents a share compares with a profit of $1.6 billion, or 28 cents a share, reported a year ago. Without the $1.45 billion EU fine, Intel had a profit of $1 billion, or 18 cents per share. Analysts had expected a profit of 8 cents per share.
"Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half," said Paul Otellini, Intel CEO in a statement.
In an earnings conference call Tuesday afternoon, Otellini qualified this statement somewhat, saying that there won't be a "recovery to prior levels."
Revenue was $8 billion, down from a year-earlier $9.5 billion. Revenue from Intel Atom microprocessors, used widely in Netbooks, and chipsets was $362 million, up 65 percent sequentially.
Gross margin, a crucial profit indicator, was 51 percent, up 5.5 points sequentially but down from 55.4 percent posted a year earlier.
The replenishment of inventories by customers was a positive sign, said Stacy Smith, Intel's chief financial officer, speaking during the conference call. "In anticipation of a seasonally up second half, the supply chain (buyers of Intel chips) began refilling inventory positions that had been depleted over the past two quarters," Smith said. "As a result, we experienced better-than-expected demand for microprocessors and chipsets."
"Consumer purchases led the way," Otellini said in the conference call, referring to consumer laptops that saw growth.
Corporate enterprise business, however, was "weak," Otellini said. Though the Intel CEO expects companies to update aging computers, "we're not counting on that in large measure in 2009," he said. Dell executives said Tuesday that global technology spending will likely remain weak for the near term as companies delay computer purchases, according to an AP report.
Otellini said he had "no opinion" on the impact of Windows 7--due later this year--in the consumer market but expected businesses to "get ready for buying next year."
Market researcher iSuppli said Tuesday that for the first time since the Dot-Com bust of 2001, the global PC market will suffer a contraction in unit shipments in 2009, due to a combination of falling IT spending and plunging sales of desktop computers.
Global PC shipments are expected to decline to 287.3 million units in 2009, down 4 percent from 299.2 million in 2008, iSuppli said.
"If you look across the pond in Europe demand is decidedly weak," said Ashok Kumar, an analyst at investment bank Collins Stewart. "And in China all the anecdotal data points are no better than tepid. None of the geographies are firing," Kumar said.
Updated at 3:20 p.m. PDT throughout.
Advanced Micro Devices on Tuesday reported a net first-quarter loss of $416 million, or 66 cents a share, though revenue exceeded estimates.
AMD also refuted Intel statements that PC sales have hit bottom, though the company said inventory problems are improving somewhat.
This loss exceeds the loss reported one year ago, when the chipmaker posted a loss of $364 million, or 60 cents a share.
Revenue hit $1.18 billion, down 21 percent from the $1.5 billion posted last year, but better than reported estimates from analysts who had expected revenue of about $1 billion.
"Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be down for the second quarter of 2009," the company said in a statement.
Chief Executive Dirk Meyer refuted Intel sentiment about PC sales recovering. During Intel's first-quarter earnings conference call last week CEO Paul Otellini said that PC sales had "bottomed out" during the first quarter.
"I don't know how anybody can say we've hit bottom, considering the macroeconomic outlook," Meyer said during the AMD earnings conference call Tuesday afternoon.
"The economy is still weak, making it difficult to forecast end-user demand," Meyer added. AMD's factory utilization dropped off precipitously during the Christmas time frame and underutilization continued in the first quarter, Meyer said.
The AMD CEO also said that the average selling prices of notebook PCs was down because of a "shift toward lower-cost machines," in a reference to low-cost Atom-based Netbooks, among other notebook products.
On the upside, AMD is accelerating its shipment of the six-core "Istanbul" server chip, which will now be available in June, Meyer said. And the company is readying a successor to its single-core Neo processor for low-cost ultra-thin notebooks: the dual-core Congo processor will ship "in the back half of the quarter," Meyer said.
Updated at 4:05 p.m. PDT with additional earnings highlights and comments from CEO Paul Otellini.
Intel's first-quarter profit fell about 56 percent from a year earlier, but Chief Executive Paul Otellini said PC sales were bottoming out.
Net income was $647 million, or 11 cents a share, down from $1.4 billion in the year-earlier period. Revenue was $7.1 billion, down about 27 percent from the $9.7 billion reported in the same period last year. Wall Street estimates were around 3 cents a share on revenue of $7 billion.
"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Otellini, in a statement.
"I believe the worst is now behind us from an inventory correction and demand level adjustment perspective," Otellini said in prepared remarks during the company's earnings conference call Monday afternoon. He added that notebook inventory has now returned to normal levels.
"Everything I've seen suggests that the industry is at a new baseline," Otellini said, responding to an analyst's question during the conference call. "We're starting to see the normal (market) seasonality...and every sign we've seen in terms of markets recovering suggests that we're likely to see typical seasonality in the second half," he said.
Otellini also said in prepared remarks that the company had reduced inventory levels 19 percent below fourth-quarter levels and the number of employees had been reduced by 1,400 from the fourth quarter.
On the new product front, Otellini said that Intel's first 32-nanometer chip, Westmere, has been "pulled in" and will be shipping later this year.
The company said it is not providing a revenue outlook at this time.
"Due to continued economic uncertainty and limited visibility, Intel is not providing a revenue outlook at this time. For internal purposes, the company is currently planning for revenue approximately flat to the first quarter," Intel said.
Other Intel first-quarter 2009 earnings highlights:
- Gross margin, a crucial indicator, was 45.6 percent, lower than the 53.1 percent in the fourth quarter.
- Gross margin percentage in the second quarter is expected to be in the mid-40s.
- Revenue from the Atom processor and chipsets was $219 million, down 27 percent sequentially.
- Intel expects shipments of recently-introduced Nehalem processor to hit one million this month.
- The average selling price for all microprocessors was approximately flat sequentially.
- For full-year 2009, capital spending is expected to be slightly down from 2008.
National Semiconductor said Wednesday it would slash 1,725 jobs, or about one-fourth if its workforce, as earnings dropped sharply in its most recent quarter.
Manufacturing facilities in Arlington, Texas, will be shuttered
(Credit: National Semiconductor)The Santa Clara, Calif.,-based company reported on Wednesday that its fiscal third-quarter profit plummeted 71 percent, to $21.1 million from $72.9 million a year ago. Revenue dropped 36 percent to $292.4 million.
Job cuts will take place across the company, which currently has a workforce of about 6,500, and will involve, in coming months, the shuttering of facilities in Arlington, Texas, and Suzhou, China.
The chipmaker will incur charges of $160 million to $180 million in severance and other costs.
National Semiconductor describes itself as a supplier of "energy-efficient analog and mixed-signal semiconductors." Its products include "power management circuits, display drivers, audio and operational amplifiers, communication interface products, and data conversion solutions," according to its Web site.
There's more bad news to come. The company said on Wednesday that it expects between a 5 percent and 10 percent sequential decline in sales, well below analyst expectations.
