AMD reports fourth quarter loss of $30 million

Sunnyvale (CA) - AMD’s fourth quarter earnings slipped into red territory, hitting a net loss of $30 million on revenue of $1.26 billion. The company attributed the loss to aggressive pricing environments in the Flash memory business, lower sales in Japan and delay of a new product for the wireless segment.

The year end result for AMD looked much better than for the fourth quarter. For 2004, the company reported record sales of just above $5 billion and net income of $91.2 million. This compares to sales of $3.5 billion and a loss of $274.5 million in 2003. But even a nine-percent sales growth of the manufacturer’s Computation Products Group (CPG) from $673 million to $730 million and the tenth consecutive quarter of improved gross margin were not enough to keep earnings in positive territory.

AMD apparently was hit unexpected pricing challenges for its Spansion memory group. While the company did not specify the origins of the "aggressive pricing environment" industry sources suggested that especially Intel drove prices lower in order to regain ground in the Flash memory market. AMD said that its MirrorBit "continued to earn customer acceptance and increased as an overall percentage of Flash memory sales."

Sales of the memory group decreased by 11 percent from $538 million to $504 million in the fourth quarter. The group reported an operating loss of $39 million, down from operating income of $15 million in the third quarter of 2004. The CPG generated operating income of $89 million in the fourth quarter, flat compared with $89 million in the third quarter.

For the entire year, both the processor and Flash memory businesses were profitable," said Robert J. Rivet, AMD’s chief financial officer. "Total sales increased by 42 percent compared with 2003, driven by 29 percent growth in our microprocessor business and 65 percent growth in our Flash memory business.