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AMD Fall Short Again In Forth Quarter

Advanced Micro Devices Inc. reverted to disappointing form again Wednesday when it missed analysts' estimates by 4 cents a share in its fourth quarter. The chip maker earned $22.3 million, or 15 cents a share, on sales of $788.8 million.

First Call consensus expected AMD to earn 19 cents a share in the quarter.

Its shares inched up 1/8 to 31 5/8 ahead of the earnings report.

The irony here is that last quarter AMD (AMD) beat the Street when it posted a profit of $1 million, or 1 cent a share, on sales of $685 million.

Prior to that unexpected boon, AMD had become infamous on Wall Street for failing to meet estimates in most quarters despite having some of the best technology in the industry.

The same old problem reared its ugly head this quarter. Cutting through all the hyperbole, AMD simply wasn't able to meet demand. Again.

"We shipped hundreds of thousands of 400MHz processors, but were unable to satisfy strong overall market demand," said chief executive Jerry Sanders in a release. "We expect to substantially increase shipments of 400MHz processors in the current quarter."

Of course, AMD has made the same promises in previous quarters.

"They've always had the technology, they just always came up short on the manufacturing side," said Ken Pearlman, an analyst at CIBC Oppenheimer. "They're not shy on customers."

Despite the earnings shortfall, the Santa Clara, Calif., company did improve its sales 29 percent vs. the year-ago quarter when it lost $12.3 million, or 9 cents a share, on sales of $613 million.

Company officials attributed the jump to increased sales of its K6-2 microprocessors.

Despite those improved sales, AMD reported a loss of $104 million, or 72 cents a share, on sales of $2.5 billion in the fiscal year compared to a loss of $21 million, or 15 cents a share, on sales of $2.35 billion last year.

The news gets worse.

Pearlman predicted AMD would meet the Street estimate. However, he was concerned that, unlike Intel Corp., AMD would likely see flat or slightly declining sales in the first quarter.

"The big issue is how well AMD does in ramping up its K7 processors," Pearlman said. "But looking at their track record, who knows?"

AMD shares moved up to a 52-week high of 32 3/4 this week after falling to a low of 12 3/4 in August.

Seventeen of the 23 institutional investment firms following the stock rate it a "hold."


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