SUNNYVALE, Calif. - Advanced Micro Devices Inc. said Thursday its second-quarter loss widened as the computer chip maker was hurt by a large asset impairment charge from discontinued operations.

Sunnyvale-based AMD, which bought Toronto-area based graphic chipmaker ATI Technologies Inc. in 2006, reported a loss of US$1.19 billion, or $1.96 per share, in the quarter that ended June 28. The world's No. 2 maker of computer microprocessors lost $600 million, or $1.09 per share, in the year-ago quarter.

The company's adjusted loss totalled 60 cents per share. Analysts polled by Thomson Financial had expected an adjusted loss of 52 cents per share.

AMD's revenue rose to $1.35 billion from $1.31 billion, but it was short of the $1.45 billion in revenue expected on Wall Street.

The company's revenue from microprocessors, chipsets and embedded processors was flat year over year at $1.10 billion, while revenue from AMD's graphics segment - which includes graphics, video and multimedia products - rose more than 17 per cent to $248 million.

AMD's results included a loss of $920 million, or $1.52 per share, from discontinued operations. In a statement, AMD chief financial officer Robert Rivet said the company "had a disappointing quarter financially" but that customer interest in its newer microprocessor and graphics products and platform offerings "is strong."

In the third quarter, AMD expects revenue to rise along normal seasonal patterns. In the third quarter of last year, AMD reported $1.63 billion in revenue. This time, analysts are looking for $1.60 billion in revenue.

AMD shares fell 20 cents, or 3.8 per cent, to $5.10 in after-hours trading. The stock finished trading Thursday up 24 cents, or 4.7 per cent, at $5.30.

Last week, AMD said it will take a $880-million writedown on the value of its handheld and digital television units, two of the smaller business segments that it acquired with the takeover of Canadian graphic chipmaker ATI Technologies, which is based in Markham north of Toronto.

California-based AMD said in a regulatory filing Friday that those two units "have not performed in accordance with the company's expectations" when it acquired ATI in 2006 for US$5.6 billion.

While ATI was an independent company, it was one of the world's two or three largest producers of graphics chips for laptop and desktop computers as well as for other electronics devices such as Microsoft and Nintendo game consoles.

ATI had seen graphics chips for handheld devices, such as smartphones, and for digital television sets as an opportunity for sales in new areas of the technology market that were growing faster than computers.

The purchase price included a US$3.2-billion allocation for goodwill, nearly three times the value of product technology that ATI had already developed and was working on in its laboratories.

AMD, which is No. 2 after Intel Corp. in terms of producing the main processor units for personal computers and laptops, acquired ATI to provide a broader range of products to its customers.

Intel was already the biggest supplier of integrated chips that combine graphics and audio processing with the main chip while ATI and Nvidia Corp. fought a fierce competition to be the top producers of discrete graphics chips.

AMD had previously written down ATI's overall value by US$1.6 billion in January, in a staggering reassessment that indicated the perception of ATI in the market had slipped dramatically.

Founded in the 1980s by a group that included K.Y. Ho, ATI had been one of Canada's biggest publicly traded technology companies until its takeover. Ho and his wife were accused of illegal insider trading of ATI shares but were completely cleared after a lengthy public hearing at the Ontario Securities Commission

Taken together, AMD has effectively said that ATI is now worth 44 per cent less as a company than when AMD bought it.

LIKE IT?  LET OTHERS KNOW

Thanks for participating!

Be the first to recommend - Sign in now


See what other people are recommending - Popular Stories