AMD witnesses 9% drop in Sales in Second Quarter

Advanced Micro Devices Inc.(AMD), the second largest producer of processors for personal computers, reported preliminary second-quarter sales that missed the company's forecast after its larger rival Intel Corp. proposed a price cut to win back customers.

Sales for the second-quarter ended July 2 sank 9% from the first quarter to $ 1.22 billion, Advanced Micro informed today in a statement. The Sunnyvale, California-based company had previously forecasted sales to be flat to slightly down from the prior quarter's $ 1.33 billion.

The chipmaker informed sales of entry-level and mainstream laptop and desktop processors were down for the quarter.

The company had estimated sales in the quarter of about US $ 1.22 billion ($ 1.63 billion), up 52% from a year earlier, but below analysts' average prediction of $ 1.31 billion.

AMD has been locked in a conflict over market share with top microprocessor maker Intel Corp., which has been aggressively cutting prices to win back orders. In a move to regain market share, Intel promised customers that it will drop prices as much as 60%.

AMD forced Intel under 80% of the market for PC microprocessors last year for the first time in four years.

“The pricing war is escalating between Intel and AMD,'' said John Lau, an analyst at Jefferies & Co. in New York. He has a “hold” rating on Advanced Micro stock and a “buy” rating on Intel and said he owns neither of them. “Both Intel and AMD will be feeling the same impact,” he said.

AMD, which will make a total earnings report on July 20, did not give any details of its profit.

AMD shares dropped 7 cents to $ 23.83 Thursday at 4 p.m. in the Composite trading at the New York Stock Exchange before the sales outlook was released. The stock has declined 22 percent this year.

Intel, which has slated an earnings announcement for July 19, is likely to report its largest profit and sales decline since 2001. Analysts expect earnings of 14 cents a share on sales of $ 8.3 billion, based on the average of 36 estimates in a Thomson survey.