AMD Narrows Q1 Loss, Keeps Lips Sealed on Further Restructuring

However, shares of the Sunnyvale, Calif.-based company rose just 4 US cents to $6.23 in after-hours trading Thursday, as AMD executives remained tightlipped about how they plan to cut costs further and return to profitability.

Before the results were reported, AMD shares rose 12 cents to $6.19 in regular trading.

Economic Turbulence

The company said it was hurt during the first three months of the year by intensifying competition with Intel (Nasdaq: INTC) that crimped its ability to unload older products and by economic turbulence that tamped down consumer spending.

AMD is the world's No. 2 maker of microprocessors, the brains of personal computers and servers. No. 1 Intel leads with about three-quarters of the market worldwide.

AMD said its net loss for the quarter that ended March 29 was $358 million, or 59 cents per share, the company's sixth quarterly loss in a row. That's narrower than AMD's $611 million or $1.11-per-share loss during the same period last year.

Stripping out 8 cents per share in charges connected to the acquisition of graphics chipmaker ATI Technologies (Nasdaq: ATYT) , AMD lost 51 cents per share in the latest period, matching the average estimate of analysts polled by Thomson Financial.

At $1.51 billion, AMD's sales were 22 percent higher than last year and in line with analysts' lowered expectations. AMD warned earlier this month that sales across all business lines were lower than it earlier anticipated.

Lengthy Product Delays

AMD has racked up more than $4 billion in losses in a skid that stretches back to the last three months of 2006, under pressure from new chips from Intel and the costs of the ATI acquisition.

Lengthy product delays have also hurt AMD's ability to win new customers.

AMD's new Opteron server chips -- critical to the company's financial recovery -- were delayed for eight months because of technical glitches. They didn't roll out in force until this month.

AMD executives did not elaborate on which markets' sluggish consumer spending hurt it. However, research firms Gartner (NYSE: IT) and IDC reported this week that the growth in PC shipments in the U.S. slowed in the first quarter while growth continued accelerating overseas.

Further Restructuring

Wall Street was also hoping for more details about AMD's restructuring plans.

The company has been hinting for a year that it is thinking about offloading some of its manufacturing duties to outside factories to save money, but it so far has not divulged any details.

Those changes would come on top of the 10 percent reduction in AMD's global workforce, affecting about 1,600 workers, that the company announced this month.

AMD chief executive Hector Ruiz would only say Thursday that the company is "on a fast pace" toward further restructuring and hopes to make an announcement soon about its manufacturing strategy.

AMD's stock is still way off its recent high of $42.10 in early 2006, when the company was steadily stealing market share from Intel with chips that were seen as more energy-efficient. After Intel fired back with a powerful new lineup, AMD's stock began sliding.

Lagging Behind Intel

Meanwhile, Intel's profits are improving because it has made a speedy transition to a new chip-making technology that lowers the cost of production.

AMD lags Intel in making its own transition to the 45-nanometer manufacturing process, which means the chips' circuitry is shrunken to an average size of 45 billionths of a meter. Smaller circuitry means chips cost less to make and they can hold more transistors.

AMD said its 45-nanometer products are expected in the second half of 2008.

The company said it expects second-quarter sales to decline in line with seasonal trends.