AMD revenue drops as CEO search continues

AMD's second-quarter revenue declined by 5 percent year over year

Advanced Micro Devices' revenue for the second fiscal quarter of 2011 sunk as the search for a new CEO continues, the company said on Thursday.

The company reported revenue of $1.57 billion for the quarter ending July 2, declining by 5 percent compared to the second quarter in the previous year. The decline was in line with a 5 percent revenue drop expected by analysts polled by Thomson Reuters.

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On a non-GAAP basis, AMD reported a net profit of $70 million, which was lower than the $83 million net profit reported in the year-ago quarter. Earnings per share was $0.09, while analysts estimated an EPS of $0.08 on a non-GAAP basis. Including charges related to GlobalFoundries assets, the company reported a net profit of $61 million on a GAAP basis, an improvement from a loss of $43 million a year ago.

Revenue from the computing solutions division, which deals in chips, was $1.2 billion, making it flat year over year. Revenue for the graphics segment was $367 million, declining from $440 million the previous year, partly due to a lower demand for discrete graphics cards.

AMD shipped around 12 million Fusion processors -- which the company calls APUs (accelerated processing units) -- through the end of the second fiscal quarter, Thomas Seifert, interim CEO and chief financial officer, said during a conference call. Shipment of APUs represented more than 70 percent of AMD's mobile chip shipments.

Earlier this year, AMD started shipping Fusion chips, which combine a graphics processor and CPU on a single chip. Mainstream PCs based on AMD's latest Fusion chips code-named Llano started appearing in the second quarter at prices between $500 and $700. AMD later this year plans to release server chips based on the new Bulldozer microarchitecture.

With Fusion, AMD is trying to focus on power efficiency to boost laptop battery life, AMD officials said. Addressing the tablet market, AMD officials said that the intellectual property in Fusion chips can be adapted for tablets.

AMD has been criticized for being slow to recognize the growth of tablets, and to date has not announced any radical change in strategy to quickly adapt to the fast-growing smartphone or tablet markets. It rushed to release its first dedicated tablet chip in June, and is continuing to release PC and server products as planned.

AMD recently switched to the 32-nanometer manufacturing process for faster and more power-efficient chips. The company plans to introduce chips made using the 28-nm process starting next year. Intel later this year will start making chips using the 22-nm process, which will include 3D transistors to help improve performance and reduce power consumption.

AMD also hopes to gain server market share with the 16-core chip code-named Interlagos, which is based on Bulldozer microarchitecture, said Rick Bergman, senior vice president and general manager of AMD's products group. The chip is due in the third quarter and has received a positive response from server makers, Bergman said.

Seifert said he expects growth in overall market share, although profitability is the company's key focus right now. "We expect to gain market share based on the products we have launched. We are confident this is going to happen in the second half this year," Seifert said.

AMD lost microprocessor-revenue market share to rival Intel during the calendar first quarter this year, according to IHS iSuppli. Intel's microprocessor revenue share was 82.6 percent, growing from 80.6 percent in last year's first quarter, while AMD's microprocessor-revenue market share fell to 10.1 percent, compared to 11.8 percent.

AMD has not found a CEO in more than six months after former chief Dirk Meyer resigned in January following disagreements with the board of directors on the direction of the company's mobile strategy. Seifert took over as interim CEO after Meyer resigned.

The search for a new CEO is a top priority, said Harry Wolin, AMD's general counsel, in a statement. The company has interviewed quality candidates, but wants to find the right person to drive the company in the right direction.

"I would like to ... emphasize that meeting a time line is not the driving force for the search, finding the right candidate is," Wolin said.

Many executives have already shied away from taking on the job of CEO, according to media reports. The list of candidates approached by AMD reportedly includes William Nuti, CEO of NCR Corp.; Pat Gelsinger, formerly Intel's chief technology officer and senior vice president and now EMC's chief operating officer; Apple's chief operating officer, Tim Cook; and Mark Hurd, who joined Oracle as co-president in September after being ousted as Hewlett-Packard's CEO.

AMD said it expects revenue in the third quarter to increase by 10 percent, plus or minus 2 percent, compared to the second quarter.

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