Margin Woes Crush AMD – Fell 4%
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Advanced Micro Devices said Wednesday that it grew its sales sequentially 9% in the third quarter, beating Wall Street estimates and matching rival Intel’s pace of growth during the same period.But the ongoing price war between AMD and Intel took a toll on profit margins, sending the company’s shares down more than 10%.
AMD said its operating income was down 8% year over year, adjusting its 2005 third-quarter results to exclude the contribution of its memory business, which it has since spun off. Gross profit margin fell to 51.4% compared with 55.4% at this time last year. AMD blamed the eroding margins on lower desktop processor prices, which dragged down the company’s overall average selling prices.
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