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AMD Slashes Sales Forecast, Citing SARS

The microprocessor maker says revenue will be $100 million less than predicted. Drop stems from competition with Intel, analysts contend.

June 25, 2003|Terril Yue Jones | Times Staff Writer

Chip maker Advanced Micro Devices Inc. said Tuesday that second-quarter revenue would fall $100 million below its earlier forecast, largely because of slow sales of computers and mobile phones in Asia in the wake of the severe acute respiratory syndrome crisis.

Sunnyvale, Calif.-based AMD said revenue would come in around $615 million, down from the $715 million predicted in April. Shares in the world's second-largest microprocessor manufacturer fell 28 cents, or 4.25%, to $6.31 on the New York Stock Exchange.

"The anticipated global sales improvement in the month of June did not materialize as we had anticipated," said Chief Financial Officer Robert J. Rivet.

AMD has been struggling to become profitable in the shadow of industry giant Intel Corp., which produces about 80% of the world's microprocessors. In April, AMD reported a first-quarter loss of $146 million, compared with a $9.16-million loss a year earlier.

AMD's problems in Asia are more the result of stiff competition from Intel than health concerns, analysts said.

"Intel's taking market share from AMD and AMD is forced to price much more aggressively than they had intended at the start of the quarter," said Rick Whittington, a semiconductor analyst with American Technology Research.

"This is a competitive issue for AMD, not a China slowdown or SARS impact," he said.

Daniel Niles, a technology analyst with the investment bank Lehman Bros., said in a research note to investors Tuesday that AMD has lost market share to Intel.

Intel spokesman Chuck Mulloy declined to comment on any effect of SARS on Intel's business, citing the "quiet period" before Intel announces its second-quarter results July 15. AMD reports second-quarter results July 16.

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