AMD and the Q4 Temple of Doom
We have gone through a very difficult time, reacted quickly and decisively, and we are on our way to really have, I believe, a phenomenal transition year in 2008.”
— AMD CEO Hector Ruiz, December 2007
2008 hasn’t quite proven to be the “phenomenal transition year” AMD believed it would be. Despite new leadership and a restructuring of its manufacturing assets, the company was not able to return to profitability by the third quarter of 2008 as it had hoped. And now, AMD (AMD) has reported a greater-than-expected net loss for the fourth quarter of 2008–its ninth consecutive one. A grotesque 33 percent drop in revenue left the company awash in $1.4 billion of red ink.
“The fourth quarter of 2008 is going to be remembered for the severe stresses placed on the global economy and on our industry,” AMD CEO Dirk Meyer told analysts. “The global economic environment led to a softening in end-customer demand for PCs and servers in what is usually the year’s strongest quarter. The reality of today’s global economy require that we redouble our focus on cash management and cash flow control, and we will do so while protecting assets.”
Suffice to say, AMD did not offer a specific forecast for its current quarter, saying only that it expects sales to continue to trend lower “in light of the current macroeconomic conditions, very limited visibility and continued corrections in the supply chain.” Shares in the company, which have lost more than 50 percent of their value since the start of the fourth quarter, closed down nearly 10 percent on the news, although they seem to be recovering today.