Intel arch rival Advanced Micro Devices (AMD) hit investors in the solar plexus on Wednesday by announcing that Atiq Raza, its president, was quitting the company on Friday.
But the chip supplier then softened the blow by announcing that losses for its second fiscal quarter were nowhere near as bad as it had predicted.
The resignation of Raza came as a shock to the markets because he was widely regarded as heir apparent to Jerry Sanders, the firm's founder and chief executive (CEO). He joined AMD in 1996 when it acquired Nexgen, which he founded, but gave no explanation for his resignation. He is also resigning from the company's board.
This leaves no successor to replace Sanders, who has said he will stand down in two years time. While Sanders has continually been criticised by long suffering shareholders, who have seen their investments in the company decline, he is one of the highest paid CEOs in Silicon Valley.
On the positive front, however, because AMD had primed analysts for a loss of $200 million dollars just a few days ago, they breathed a sigh of relief at the actual loss of $162 million or $1.10 per share, excluding charges and a one time gain, which was reported after the bell.
The company made a one off, after tax gain of $259 million from the sale of Vantis, its programmable logic subsidiary, but this was offset by a substantial operating loss of $173 million. AMD also took a $17.5 million hit due to restructuring and other special charges. Its loss in the year ago period was $64.6 million.
Sales fell six per cent from the previous quarter, but increased 13 per cent to $595.1 million compared with the same quarter last year despite the ongoing price war with Intel at the low end of the PC market. Intel had aggressively cut the prices of its Celeron chip to win back market share from AMD's K6 chip. (see VNU Newswire, 14 July, 1999)
While the company's share price has recently been languishing at $18, way down from its peak of more than $45 in 1997, and has lost money in six of the last eight quarters, it is still regarded as the one organisation that can keep Intel honest, especially as Cyrix, the other X86 clone maker, was sold to Taiwanese company Via by National Semiconductor.
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