Arik Hesseldahl

Recent Posts by Arik Hesseldahl

AMD’s Outlook Sinks Stock

AMD CEO Rory Read

Chips may be chips, but the fortunes of the two biggest U.S. companies who manufacture the microprocessors in PCs and servers couldn’t be more different.

First there’s Intel, which has parlayed its deep strategic command of the complex and expensive process of manufacturing chips into a commanding position at one of the crucial pivot points of tech hardware, despite the uncertain state of the global economy, and also despite the dire predictions of analysts.

Then there’s Advanced Micro Devices, which competes for the same sockets in PCs and servers that Intel does, but with a lot less success to show for it. While it reported a non-GAAP profit of 19 cents a share on $1.7 billion in sales, its outlook for the current quarter was weak enough to send AMD shares down 2 percent in after-hours trading. Its revenue forecast of $1.51 billion to $1.61 billion caught analysts by surprise, as they had been expecting average revenue of $1.6 billion.

Then there’s the matter of a $209 million charge from the writedown of AMD’s stake in Globalfoundries, the contract chip manufacturer that was cobbled together out of what used to be AMD’s factories in Germany, Texas, and one under construction in upstate New York; plus the former Chartered Semiconductor. That expense went a long way toward pushing AMD’s results into a 24-cent per-share loss on a GAAP basis.

Spinning off its expensive factories was supposed to save AMD, and it may well have done so. AMD now owns less than 9 percent of Globalfoundries. But the strategic shift has yet to pay off in the kind of success that AMD envisioned when it first plotted the move.


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