AMD second quarter fizzles

SAN FRANCISCO, USA: Advanced Micro Devices Inc posted a wider than expected loss and a steep slide in margins, sending its shares spiraling more than 12 per cent lower.

The company said second quarter gross margins - which it called "disappointing" - dived to 37 percent from 43 per cent in the previous quarter. And it forecast that chip revenues would rise just marginally in the current quarter.

AMD's tepid showing stood in stark contrast to much-larger rival Intel Corp, which surprised markets this month and lifted industry sentiment by reporting sharply better than expected earnings.

Chief Executive Dirk Meyer blamed AMD's limp margins on factory underutilization, lower selling prices for notebook PCs, and an inventory sell off. But he hoped to turn that around in the second half of the year.

"With the strong flow of new products and a leaner cost structure, coupled with the assumption of modest seasonal growth, we are positioned for stronger financial performance in the second half of this year," Meyer said on a conference call with investors.

Investors had hoped rosy forecasts from Intel, and to a lesser degree IBM, signaled the tech industry slump might have hit bottom. Also on Tuesday, Apple Inc blew past quarterly expectations, renewing hope that consumer demand was recovering.

AMD, which has struggled to safeguard its market share against Intel, reported a net loss in the second quarter ended June 27 of $335 million, or 49 cents a share.

Excluding certain items, AMD posted a 62 cent loss, compared with the 53 cent loss forecast by analysts, according to Reuters Estimates.

Revenue slid 13 percent from a year ago to $1.18 billion from $1.36 billion, a tad above expectations of $1.13 billion.