Advanced Micro Devices suffered a ‘perfect storm’ of problems in its first quarter, and missed financial targets by a mile as pressure from Intel lost it market share for the first time in three years.
We’re not happy with having to miss the damn numbers, chief executive Hector Ruiz said during a conference call with analysts yesterday afternoon.
The company lost $611m in the three months to March 31, compared to a profit of $185m a year ago. Revenue was down 7% at $1.23bn. Analysts on average were expecting $1.26bn in sales.
AMD had already said that it would miss targets last week, a profit warning in which it said revenue would be about $300m less than analysts were expecting.
The analyst firm iSupply estimates that AMD’s market share dropped from 15.7% to 11.1% in the quarter.
While there was no small amount of contrition from executives during yesterday’s earning’s call, AMD president Dirk Meyer also laid blame squarely at the feet of rival Intel.
The pricing pressure that started in Q2 of last year continued in the mainstream CPU business, as our competitor did everything in their power to protect their monopoly, he said.
That was one of four factors AMD blamed for sinking revenue and market share. It also suffered some major growing pains with respect to component supply, had some mix and delivery issues, and saw overall weakening demand.
The company has started an overhaul that Ruiz said would be bigger and more dramatic in impact than its last restructuring, in 2002. There are no major layoffs on the cards, but AMD does expect to rein in hiring and end the year with 500 fewer employees, a 3% reduction.
A new executive task force headed by Ruiz will explore options to return the company to profitability.
Intel emerged from the pricing war less damaged, although its just-reported first quarter was far from stellar. Intel saw revenue down just 1% and net income up 19% due to a tax windfall, but said that pricing held firm.
AMD thinks revenue in the current second quarter will be flat to slightly up, which is slightly more optimistic than Intel’s predictions for the same period.