Huge Q1 losses for AMD

AMD hopes that the release of its Barcelona architecture will help pick up sales when it is released later this year

For the second quarter in a row, chip maker Advanced Micro Devices (AMD) is making huge losses. The company has just announced Q1 losses of $611 million.

Wall Street analysts had predicted that AMD would get bad news - but not quite this bad. The company announced profit warnings earlier this month, stating that the previous revenue prognosis of $1.6bn to $1.7bn would not be achieved. According to analyst predictions, AMD was to make $1.26bn during the first quarter, and lose $0.48 per share. But the reality of AMD's results is even worse.

AMD lost $1.11 per share, making only $1.23bn during the past quarter - down 30 per cent on the previous quarter. During the same period last year, the chip maker made a $185 million profit and generated $1.33bn but AMD stated the two figures are incomparable since it bought graphics chip maker ATI last year. The buyout and integration of ATI cost $113m in the first quarter, AMD said.

AMD blames the poor results on 'significantly' lower microprocessor sales and lower prices. Arch rival Intel has had similar problems ; both blame the ongoing price war between the companies for the loss of profits.

"After more than three years of successfully executing our customer expansion strategy and significantly growing our unit and revenue base, our first quarter performance is disappointing and unacceptable," said Robert Rivet, chief financial officer at AMD.

AMD aims to bring down its annual costs by $100m, mainly through reducing recruitment of new staff. It will focus on introducing its 65nm Barcelona quad-core processors to the market as quickly as possible.