Advanced Micro First-Quarter Sales Fall 8% on Prices (Update2)

Posted by Draving on 04/9/07 in AMD

(Bloomberg) — Advanced Micro Devices Inc., the world’s second-largest maker of personal-computer processors, said revenue declined 8 percent in the first quarter amid a pricing battle with larger rival Intel Corp.

AMD plans to cut spending by $500 million this year and limit hiring, the Sunnyvale, California-based company said in a statement today. Sales fell to $1.23 billion from $1.33 billion a year earlier, according to preliminary figures.

The drop in revenue wasn’t as big as some investors anticipated, sending the shares higher. Advanced Micro sparked concern last month when it said sales would fall short of its forecast for $1.6 billion to $1.7 billion.

“It’s bad, but it’s not that bad,” said Cody Acree, an analyst at Stifel Nicolaus & Co. in Baltimore who rates the shares “hold.” He doesn’t own the stock. “There have been some sell-side analysts out there saying that the numbers would be much worse than this.”

Intel has superior products and it is pricing them “aggressively,” putting pressure on Advanced Micro’s sales and profitability, Acree said. Some analysts had speculated that AMD’s sales would drop to less than $900 million, he said.

Shares of Advanced Micro rose 53 cents, or 4.1 percent, to $13.39 at 10:01 a.m. in New York Stock Exchange trading. The stock had lost 37 percent this year before today.

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