Updated from 5:34 p.m. ET
Semiconductor maker
Advanced Micro Devices (AMD Quote - Cramer on AMD - Stock Picks) said Wednesday that fourth-quarter earnings came in at 53 cents a share, below downwardly revised expectations. The company also indicated that it expects a flat first quarter in terms of revenue.
AMD's earnings per share were below the consensus estimate of 55 cents a share, according to
First Call/Thomson Financial. In the previous quarter, the company earned 64 cents a share, and it earned 43 cents a share in the year-ago quarter.
Revenue, meanwhile, came in at $1.18 billion, below the consensus estimate of $1.22 billion and the previous quarter's $1.21 billion. Revenue was up from the year-ago quarter's $969 million.
Looking ahead, AMD said that first-quarter revenue would be flat from the fourth quarter's $1.18 billion. That's a little better than at
Intel (INTC Quote - Cramer on INTC - Stock Picks), which expects revenue to decline by about 15% in the first quarter from the fourth quarter -- far below analysts' expectations. AMD also expects that unit shipments will decline to 6 million to 6.5 million from 7 million in the fourth quarter. That's above
Merrill Lynch analyst Joe Osha's estimates for 5.5 million unit shipments. (Merrill hasn't done underwriting for AMD.)
For the year, AMD said its revenue growth would be at the high end of analysts' expectations for 7% to 15% growth. Based on 15% growth, AMD said net income would come in around $2 a share. The consensus estimate is for earnings per share of $2.02.
During a conference call, AMD CEO Jerry Sanders reiterated that based on his experience, he doesn't foresee as weak a first quarter as the larger Intel does. "They're either serving different markets, or they loaded customers up last quarter and are paying this quarter," Sanders said.
And the company intends to continue spending on equipment and infrastructure in 2001, raising its estimate for capital expenditures by 24% to $1 billion, he said. Intel on Tuesday said its spending would rise 12%.
AMD and Intel were hurt as demand declined last quarter for personal computers. Microprocessors made by AMD run those PCs. Competitors such as Intel also
suffered in the latter half of 2000 as weaker PC demand ate into their own revenue and caused inventories to build.
The declining demand was behind AMD's decision to issue a
warning to investors in December that its earnings would be in the 50 cents to 60 cents a share range -- not the 68 cents Wall Street then expected. In addition, the company said revenue would be flat to slightly higher.
Industrywide PC revenues are seen sliding about 5% this year,
Credit Suisse First Boston said Wednesday in a note. Amid this weak PC demand, AMD has been trying to break into some markets that have traditionally belonged to Intel, such as the corporate market. In addition, it has launched lower-priced chips to go into less-expensive PCs. AMD said it gained 3 percentage points of market share during the year in PC processors.
One area of concern is in the once-hot flash memory market, which analysts
worry is cooling off as more capacity comes online. AMD makes flash, which is used in digital cameras, cell phones, and personal digital assistants. But while growth is seen slowing to 40% in 2001 after more than doubling in 2000, AMD says it still will make planned capacity expansions in this year.
Caroline Humer
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