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AMD's sales rise at Intel's expense

Advanced Micro Devices Inc., Intel Corp's top rival in the market for microprocessors, said Wednesday first-quarter profit fell 34 percent because a slump in personal-computer demand crimped sales of its chips.

Net income fell to US$124.8 million, or US$0.37 a share, from US$189.3 million, or US$0.55, a year earlier. The company beat forecasts for profit of US$0.33, the average estimate of analysts polled by First Call/Thomson Financial. Sales rose 8.9 percent to US$1.19 billion from US$1.09 billion.

Advanced Micro, one of the few computer-related companies that didn't trim its forecast during the quarter, has picked up more business from Intel and suffered less than other chipmakers as the economy slowed, analysts said. The company said earnings for the year will be in line with analysts' current estimates.

"They are accelerating the rate at which they gained market share from Intel," said Robertson Stephens analyst Eric Rothdeutsch, who rates the stock a "buy."

Advanced Micro shares rose as high as US$30.10 after the report.

They had added US$4.85 to US$27.85 in regular US trading on Wednesday. The stock, the best performer in the Standard & Poor's 500 Index so far this year, has more than doubled in 2001.

Sales in the traditionally slow second quarter may fall as much as 10 percent from the first quarter, Chairman Jerry Sanders said on a conference call. The personal computer segment is looking up now, and communications customers will continue to lag, he said.

"This is going to be the toughest quarter," Sanders said.

"The PC industry has now gotten inventory in pretty good shape. We do not expect a precipitous falloff in Q2."

The company earned a split-adjusted US$0.60 a share on sales of US$1.17 billion in last year's second quarter.

Flash-memory sales dropped 10 percent in the first quarter from the December period. Revenue from flash, which stores data when electronic devices are switched off, will fall again in the current quarter and then improve later this year when cell-phone demand picks up, Advanced Micro said.

Sales of the company's flagship Athlon and Duron PC chips rose both in units and revenue from the previous period.

The chipmaker won 21 percent of the PC processor market during the quarter, up from 17 percent in the December period. By contrast, Intel's share fell for the third consecutive quarter to 77 percent from 82 percent, according to preliminary data from Mercury Research.

Advanced Micro expects percentage growth for the PC industry in the "high single digits" this year, with demand climbing in the second half as more consumers buy laptops and desktop systems when Microsoft Corp's new Windows XP operating system becomes available.
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