By David Lawsky and Gabriel Madway
SAN FRANCISCO (Reuters) - U.S. chip maker Advanced Micro Devices
Underscoring the dismal industry landscape, diversified U.S. chipmaker Marvell Technology Group Ltd
Other makers of PC components have also taken a hit. Intel
AMD's gross margins dived to 23 percent in the fiscal fourth quarter after taking into account a $227 million writedown of inventory because of weak market conditions. The firm's gross margins stood at 44 percent a year earlier, and 51 percent in the previous quarter.
"It's a bit surprising to see their financials fall off so much more than Intel's. It has to do with market weakness and also may be a reflection of the competitive nature of the product," said Patrick Wang of Wedbush Morgan Securities.
"It was a relatively disappointing quarter, but the ugliness in the quarter was really expected at this point."
Still, AMD told a conference call that it hoped to have lowered its revenue break-even point to $1.3 billion from $1.5 billion by the fiscal second quarter, highlighting cost controls.
For now, the firm expected revenue in the first quarter to decrease from the fourth quarter, it said without elaborating. AMD said last week it would eliminate 1,100 jobs and take more charges for its purchase of graphics chip maker ATI.
The firm reported on Thursday a net loss of $1.42 billion, or $2.34 a share for the quarter ending December 27, compared with a loss of $1.77 billion, or $3.06 a share, a year ago.
Excluding certain items, the company posted a loss of 69 cents a share. Analysts, on average, had expected a loss of 56 cents a share, according to Reuters Estimates.
Revenue for the second-largest maker of central processing units for personal computers fell 33 percent to $1.16 billion, compared with analysts' estimates of $1.19 billion according to Reuters Estimates.
Shares of AMD, based in Sunnyvale, California, fell to $1.95 after closing regular trading down 10.2 percent at $2.02.
Its disappointing results and the lack of clearer guidance pointed to the lack of visibility plaguing much of the sector.
Marvell now expects revenue for the January quarter of $500 million to $520 million, well below its previous forecast of $690 million to $730 million.
Sehat Sutardja, Marvell's chief executive, said there was much uncertainty around the "duration and depth" of the global economic slowdown, particularly in the PC and consumer electronics markets.
It "is clear an inventory correction process is underway in the near term," Sutardja said in a statement. "Consequently, we will continue to take actions to re-align our expense profile to the current environment."
Longer term, AMD has announced that it will move to an asset-smart strategy, breaking itself into a foundry company and a design company.
Executives on a conference call said the firm planned to split off its foundry company if it won shareholder approval.
AMD conceded that Intel had sent a letter seeking to "discuss" whether AMD's creating that foundry company had violated agreements linked to the cross-licensing of patents between the two firms, but AMD executives said on Thursday that was not a factor.
Intel had agreed years ago to license some of its patents to AMD, placing certain conditions on their use.
(Reporting by David Lawsky and Gabriel Madway, editing by Leslie Gevirtz)
