Advanced Micro Devices reported second quarter numbers that missed Wall Street expectations by a mile. The Sunnyvale, California chipmaker weighed in with net income of $9.97m, or $0.07 per share when the First Call estimate, representing the conservative end of popular opinion, was more than triple that at $0.22. Some firms, such as Deutsche Morgan Grenfell, were looking for $0.26. The disparity in earnings and expectations, according to AMD, is largely due to the fact that analysts simply weren’t listening when the company warned that expenses as a percentage of revenues would be considerably high for the quarter, coming in at a hefty 62%. The shortfall is also a reflection of AMD’s rapid shift to newer products, namely the heralded K-6 MMX chip launched in April (CI No 3,132), and the resulting price decline for older products. Subpar performances by the Vantis programmable logic unit and the memory products group, whose combined revenues were essentially flat with the prior quarter and up only 8% from the year-ago quarter, didn’t help matters. In after-hours trading Tuesday, AMD shares fell to $37.75 from $39.125 just before the results were released and analysts are expecting a decline of as much as 10% on Wednesday. Revenue for the quarter increased 31% to $594.6m. For the year-ago quarter, AMD posted a net loss of $34.7m. Midterm net income was $22.9m, or $0.16 per share, on revenue up 14.7% at $1.15bn.
Content from our partners
