Chip war takes toll on AMD

AMD released a warning last week that its quarterly earnings would fall well below analysts' estimations.

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By  Published  January 18, 2007

AMD released a warning last week that its quarterly earnings would fall well below analysts' estimations.

The chip manufacturer said it expects revenues in its 2006 fiscal fourth quarter to rise 3% from US$1.33 billion last year - indicating sales of around US$1.37 billion - but would be "substantially" lower than in the third quarter.

Analysts had forecast AMD's revenue for Q4 would hit US$1.84 billion, according to reports, and the news of the drop in earnings sent shares in the world's second largest microprocessor maker down 10% on the New York Stock Exchange.

AMD blamed the price war it has been waging with Intel for the fall in revenue.

"The fourth quarter gross margin and operating income were impacting by significantly lower microprocessor average selling prices, which largely offset a significant increase in unit sales," the vendor said.

AMD is scheduled to release its results next week on January 23.

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