AMD warns of significant dip in Q4 earnings

Points to sharp drop in PC processor prices

By John Blau

January 12, 2007 12:00 PM ET

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IDG News Service - Tumbling microprocessor prices have prompted Advanced Micro Devices Inc. to warn of a dip in earnings ahead of its fourth-quarter results at the end of the month.

The chip maker expects fourth-quarter operating income to be positive but "substantially lower" than in the third quarter, it said yesterday.

The company, which gave no figures, reported operating income of $119 million in the third quarter.

AMD attributed the dip in earnings to a sharp drop in prices for PC processors, which largely offset a "significant increase" in unit sales.

For the fourth quarter, which ended Dec. 31, AMD expects revenue, excluding its recent acquisition of ATI Technologies Inc., to increase 3% from the $1.33 billion reported in the third quarter.

Analysts had been expecting AMD to report fourth-quarter revenue of $1.85 billion and earnings per share of 23 cents, according to Thomson Financial.

AMD, which will report its fourth-quarter results Jan. 23, has been taking semiconductor market share away from rival Intel Corp. in the past year with new dual-core processors, forcing Intel into a defensive posture.

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