Advanced Micro Devices Inc said third-quarter sales fell a greater-than-expected 22 percent from the prior period as the computer-chip maker cut prices in response to competition from Intel Corp.
Sales were about US$766 million, the company said, based on a preliminary review of results. The loss, excluding some expenses, was US$90 million to US$110 million, or US$0.26 to US$0.31 a share, compared with analysts' average forecast for a loss of 12 cents, according to a poll by Thomson Financial/First Call.
Advanced Micro, Intel's main rival in microprocessors, last month announced plans to fire 15 percent of its workers to curb costs as the chip industry faces its worst year. At the same time, Intel has slashed prices on its Pentium chips to regain market share lost to Advanced Micro. Advanced Micro said average selling prices fell more than expected in the third quarter.
"You have got a shrinking pie, and you've got a dominant player willing to cut margin to the bone," said Louis Kokernak, senior equity strategist for Martin Capital Advisors, which owns 23,000 Advanced Micro shares. "Intel has extracted a concerted price war, and it's started to take its toll."
Shares of US-based Advanced Micro fell US$0.40, or 4.4 percent, to US$8.60. The stock has dropped 63 percent in the past year.
The company's largest shareholder is Janus Capital Corp with 21.6 million shares, or 6.3 percent.
The company issued its preliminary results shortly after 12am San Francisco time because the company didn't compile its latest numbers until late yesterday and wanted to make sure the news was available before the open of markets today, spokesman John Greenagel said.
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