Advanced Micro's sales decline less than projected

Advanced Micro Devices Inc., the Sunnyvale, California-based personal-computer processors manufacturing company reported a decline in first-quarter sales. The company is taking heart from the fact that the sales number could have been worse as some investors anticipated even lower numbers.

Cody Acree, an analyst at Stifel Nicolaus & Co. said, "It's bad, but it's not that bad. There have been some sell-side analysts out there saying that the numbers would be much worse than this."

The company had announced earlier that it would miss an initial forecast of $1.6 billion to $1.7 billion. On April, 9 the company said that first-quarter sales were $1.225 billion, an 8 percent decline from the previous year.

The results sent AMD’s shares higher. AMD shares rose 49 cent, or 3.8 percent, to $13.35 after the announcement.

Advanced Micro Devices is the world's second-largest maker of personal-computer processors, behind Intel. The company was founded in 1969 by a group of former executives from Fairchild Semiconductor, including Jerry Sanders III, Ed Turney, John Carey, Sven Simonsen, Jack Gifford and three members from Gifford's team, Frank Botte, Jim Giles and Larry Stenger.

AMD is the world's second-largest supplier of x86 based processors, the largest supplier of discrete graphics products as a result of the merger with ATI Technologies in 2006, and owns a 37 percent share of Spansion, a supplier of non-volatile flash memory.

AMD and Intel Corp vie for market share of the personal-computer processors market. Intel has better products and prices them aggressively, putting pressure on Advanced Micro's sales and profitability.

Raymond James Financial analyst Ashok Kumar commented, "AMD is a credible competitor to Intel and has a very competitive product portfolio, and when that is the case the primary differentiating factor between the products is price. When they're competing on price alone, it's an old story."

In order to compete with Intel on more than price, AMD intends to release ‘Barcelona’, a chip that has four cores. It is expected to give AMD a technical edge over Intel, first in servers and later on desktops and notebooks.

Things are looking good for AMD thus far. As of the end of 2006, AMD’s share of the combined market for PCs, notebooks, and servers at the close of the fourth quarter stood at 25.3 percent, up from 23.3 percent in the third quarter and 21.4 percent in the fourth quarter of 2005. Intel's share, meanwhile, has been slipping from 76 percent in the third quarter to 74.4 percent at the end of the fourth