Post a Comment
Record Opteron Sales Boost AMD Revs
Online staff -- Electronic News, 4/13/2006
Strong server sales and firmer average selling prices translated to higher revenues for processor maker Advanced Micro Devices in Q1, but cost pressures and guidance for future quarters tempered the good news.
The Sunnyvale, Calif.-based company reported net income of $185 million on sales of $1.33 billion in its Q1, with record Opteron processor sales – the company’s server line – driving quarter’s numbers.
Sales for Q1 were 1.5 percent higher sequentially and 70.5 percent higher year-over-year. AMD experienced a tough Q1 last year with a net loss of $17 million, or 4 cents per share, due to an industry-wide NOR flash memory oversupply and strong pricing pressure. AMD has since spun off its memory business, Spansion.
AMD expects Q2 sales to be flat to slightly down seasonally from Q1, about a 65 percent increase from comparable sales in Q2 2005. Still, this forecast did not thrill Wall Street analysts.
“While AMD delivered Q1 earnings per share upside (and uncharacteristic versus recent quarters) in-line revenues, revenue guidance and cost trends are disappointing, and suggest increasing pressure from Intel,” said Ben Lynch a financial analyst with Deutsche Bank. “We believe AMD has passed its peak fundamentals, with earnings per share upgrades being difficult post these results.”
AMD said strength across all its platforms in the commercial space helped drive the higher numbers in Q1. AMD has made improving its share in the commercial space a top priority for this fiscal year to follow on to its success in the consumer space.
AMD said its record Opteron processor sales were driven, in particular, by strong demand for dual-core processors for servers and workstations. Shipments of AMD Turion 64 mobile processors also increased quarter-on-quarter. Geographically, processor sales were especially strong in Greater China, Latin America, Russia and South Asia, said AMD.
Company executives said that the company appears to continue to gain share on a revenue basis against rival Intel.
“AMD had another great quarter,” said Robert Rivet, AMD’s CFO, in a statement. “Building on our positive momentum, we believe we once again gained dollar market share based on strong customer demand for AMD64 single and multi-core processors. We expanded our global customer base in the quarter, achieved record AMD Opteron processor sales, increased our average selling price, and realized year-over-year sales growth of 71 percent. Our manufacturing strategy execution was excellent and our technology transitions remain on track, with 65nm production shipments expected in the second half of 2006.”
Q1 gross margin increased to a record 58.5 percent, compared to 57.3 percent in Q4 2005. The increase was largely due to product mix improvement, higher desktop and mobile ASPs and manufacturing efficiencies, said AMD. Operating income was $259 million in Q1, up from $64 million in Q1 2005 and down slightly from $268 million in Q4 2005.
