AMD posts second-quarter loss of $330m

AMD's shares dipped to $3.60 in after-hours trading

AMD announced its second-quarter results on Tuesday, reporting losses that were down from the same period the previous year.

The second largest maker of x86 chips failed to match its much larger rival Intel's more upbeat results in the quarter, despite reporting along with its recently spun-off Global Foundries division.

The combined companies posted a loss of $330m (£201m), or 49 cents (30p) per share, on revenues of $1.18bn (£719m).

Sales were down 13 per cent from the same period in 2008, while quarterly losses fell by 75 per cent from $1.2bn (£731m) in the same period 2008.

AMD's shares dropped 48 cents, or almost 12 per cent, to $3.60 (£2.20) in after-hours trading.

The company blamed its poor showing on disappointing gross margins, which fell from 35 per cent of revenue last quarter to 27 per cent this quarter, exclusive of Global Foundries.

AMD said that selling off some older chip inventories during the quarter contributed to the lower margins.

The company claimed to have made strides in its product execution, however, and said that its margins should begin to recover as it sells newer chips this quarter.

"While we increased cash, exceeded our revenue plan and reduced operating expenses in the second quarter, gross margin was disappointing," AMD chief executive Dirk Meyer told press and analysts.

AMD is still a company in transition, though. AMD Red, formerly ATI, and AMD Green merged last year, and the Global Foundries manufacturing operation has recently been spun off from its parent company.

One bright spot in AMD's report was that its graphics business has seen some improvements, and that AMD continues to chip away at Nvidia's market share.

The outlook could also be looking up for the next quarter, with a slew of new AMD products on the way. It is widely expected that the upcoming Tigress and Congo platforms will improve the company's fortunes in the notebook space, while Istanbul should give it continued headway in the server market, at least until Intel's Westmere bursts on the scene.