AMD Posts Quarterly Loss, Names New CEO

NEW YORK (Reuters) – Advanced Micro Devices Inc (AMD.N: Quote, Profile, Research, Stock Buzz)posted a wider-than-expected quarterly loss and named a newchief executive on Thursday, as the chipmaker struggled toregain market share from Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz).

But the appointment of Chief Operating Officer Dirk Meyerto succeed Hector Ruiz as CEO did not resuscitate AMD shares,which fell as much as 9 percent after the earnings report.

Ruiz, who is staying on as Chairman and has been groomingMeyer as a successor for two years, said there was no questionthat he was the best candidate for the job at AMD, which hasposted net losses for seven consecutive quarters.

"He’s watched me do all the screw ups that I did andunderstands much better the things that we need to do better,which an outside candidate cannot," Ruiz said in a telephoneinterview.

Meyer said he would focus on execution and reaching andsustaining profitability in his new job. Ruiz plans to keepworking on AMD’s asset-light manufacturing strategy andpromised to announce details by the year end. AMD plans to usenew partnerships to reduce manufacturing costs.

American Technology Research analyst Doug Freedman saidsome investors may be disappointed AMD chose from within itsranks, although he held out hope the move would foretellimproving fortunes for the company.

"I think they probably are making the switch becausethey’re seeing a light at the end of the tunnel. I thinkthey’ve identified this as the trough," Freedman said, notingthat AMD has new products that should soon help boost sales.

AMD has been losing market share to Intel and remains ageneration behind its larger rival in chip-making technology.

It is banking in part on its Barcelona servermicroprocessor, now shipping in volume, to turn things around.That chip had been delayed by a flaw.

The company posted a second-quarter net loss of $1.19billion, or $1.96 per share, compared with a year-ago net lossof $600 million, or $1.09.

Its quarterly loss included a $1.44 per share impairmentcharge for the write-off of some of the value of its 2006purchase of graphics chipmaker ATI Technologies.

Its operating loss would have been 60 cents a share,excluding an unusual gain of 16 cents a share, compared withthe average Wall Street expectation for a loss of 52 cents ashare from analysts polled by Reuters Estimates.

Revenue rose to $1.35 billion from $1.31 billion a year agobut was down seven percent from the first quarter.

Charter Equity Research analyst John Dryden said the bottomand top line results were disappointing.

"Processors were weak. Graphics was in line. This led toweak margins and a shortfall to overall per share figure," saidDryden expected a gross profit margin of 41 percent comparedwith the 37 percent AMD reported.

AMD’s results come two days after Intel posted a 25 percentgain in net profit as it extended gains in the notebookpersonal computer market. Intel also gave a revenue forecastfor the current quarter that topped expectations.

"They’re losing share to Intel and they haven’t been ableto reverse the losses in spite of new products across server,notebook and desktop," Dryden said.

AMD said that, while it was disappointed with its financialresults, it remained committed to posting an operating profitfor the second half of the year based on new products andcontinued action aimed at reducing its break-even point.

AMD said expects third-quarter revenue to increase in linewith typical seasonal trends. It said the average seasonalincrease would be between 8 percent and 10 percent.

It would not say whether it would post a profit in thethird quarter, but said its break-even point for quarterlyrevenue would be $1.5 billion.

The shares of Sunnyvale, California-based AMD fell as lowas $4.80 in late trading after closing up 24 cents at $5.30 onthe New York Stock Exchange.

(Additional reporting by Duncan Martell in San Francisco;

Editing by Andre Grenon)