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images/news/amd.jpgAMD reported its second-quarter results yesterday, and as expected, posted heavy losses. For the second quarter of 2007, AMD said it ended up $600 million, or $1.09 per share, in the red on revenues of $1.38 billion. That's a harsh reversal from the 18¢ per share profit the company made during the second quarter of 2006.
Of the $600 million loss, $130 million was related to AMD's purchase of ATI, which AMD acquired last fall for $5.6 billion, along with severance costs, stock-compensation costs, and debt issuance charges.
Revenues were actually up over last year's figure of $1.22 billion (which makes sense given that this years revenues include ATI), and more importantly for AMD, the company's sales volumes grew during the quarter. Gross margins suffered, however, dropping from 57 percent during the second quarter of 2006 to 33 percent. That's what happens when you get caught in a price war against your main competitor and end up cutting prices to the bone. The situation has improved since the first quarter of 2007, with AMD's revenues up 12 percent quarter-over-quarter and gross margins up 5 percent.
arstechnica
Of the $600 million loss, $130 million was related to AMD's purchase of ATI, which AMD acquired last fall for $5.6 billion, along with severance costs, stock-compensation costs, and debt issuance charges.
Revenues were actually up over last year's figure of $1.22 billion (which makes sense given that this years revenues include ATI), and more importantly for AMD, the company's sales volumes grew during the quarter. Gross margins suffered, however, dropping from 57 percent during the second quarter of 2006 to 33 percent. That's what happens when you get caught in a price war against your main competitor and end up cutting prices to the bone. The situation has improved since the first quarter of 2007, with AMD's revenues up 12 percent quarter-over-quarter and gross margins up 5 percent.
arstechnica
I guess it shows that AMD is making some sacrifices to gain more market share over Intel partly by cutting its prices. Revenues going up means they sell more so I think that this strategy is working. Also with the improved Dresden plant they should be able to be even more competitive. We haven't seen the end of AMD yet. Well I hope not.
