NEW YORK (Reuters) - Advanced Micro Devices Inc AMD.N expects its core business to make a net profit by year's end with the personal computer market potentially stronger in the second half, Chief Executive Dirk Meyer said on Monday.
Speaking at the Reuters Global Technology Summit in New York, Meyer said AMD’s main division would end the year profitable and with positive free cash flow if the PC market improves in the second half from the first, as is the case usually.
A spokeswoman said Meyer’s forecast excluded GlobalFoundries, a joint venture between AMD and an investment arm of Abu Dhabi that took over the U.S. chip company’s manufacturing assets in March.
The two companies have consolidated reporting and that consolidated report will not show a profit, she said.
“On the assumption we return to at least nominal seasonality from a growth perspective, we’ll be in good shape to leave this year with a profit and free cash flow,” he said. “I’m hopeful things will stabilize and we’ll see a resumption of growth in the back half of the year.”
Meyer was giving his first in-depth interview since the European Commission last week ruled that Intel Corp INTC.O, the world's largest maker of microchips, had given illegal rebates to computer makers to try and depress AMD's market share.
Intel was ordered to end its practices with immediate effect. Meyer said he expected no “light switch” effect from the ruling, but was optimistic about the company’s future.
“Over time, it’s going to allow us to more successfully compete for business,” he said.
Asked if AMD might seek additional funding from Abu Dhabi on top of the investment already gained in the foundry venture, Meyer said he had not spoken to representatives of the oil-rich Emirate.
DONE WITH LAYOFFS
Sensing stability in an industry pummeled by the worst recession in decades and a horrendous decline in IT spending, Meyer said the company was done with restructuring and layoffs.
AMD said in January it would slash 1,100 jobs.
Meyer said the company has cut costs to the extent that it could break even when revenue reaches $1.3 billion a quarter, or a little less than $5.5 billion annual revenue. AMD’s previous break-even point had been $8 billion revenue at the end of 2007.
Looking ahead, AMD is looking to make inroads into a low-cost computer and microprocessor market now dominated by arch-foe Intel.
The fastest growing -- some say the only growing -- segment of growth in recent months has been netbooks, the small computers driven by Intel’s low-powered Atom processor.
Asked if AMD had plans to get into that market, he said that the company had announced plans for a low-cost processor.
He argued that there would be a “continuum of price points, form factors” -- a convergence of netbooks and increasingly smaller notebooks -- and said that the distinction between netbooks and notebooks would go away.
For now, he said a netbook was defined very simply: “Netbooks have Atom. Notebooks don’t.”
(For summit blog: blogs.reuters.com/summits/)
Reporting by David Lawsky and Sinead Carew; Editing by Edwin Chan, Richard Chang
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