SUNNYVALE, Calif. (AFX) - Advanced Micro Devices Inc. shares tumbled more than 15 percent to a new 52-week low Friday, a day after reporting its second-quarter profit missed Wall Street expectations as the chip maker struggled with aggressive price cuts by larger rival Intel Corp.
The company said in reporting its earnings after the market closed Thursday that it expects demand to be 'seasonally strong' in the second half of the year, though profits could be eroded if average selling prices continue to fall.
Shares fell $3.39, or 15.7 percent, to close at $18.26 Friday on the New York Stock Exchange after briefly falling to a new 52-week low of $18.23 earlier in the session.
For the three months ended July 2, AMD earned $88.8 million, or 18 cents per share, up from $11.3 million, or 3 cents per share, in the same quarter of 2005. Last year's profit was depressed by its unprofitable flash memory business, which was spun off in late 2005.
Revenue was $1.22 billion, down from $1.26 billion last year.
Analysts surveyed by Thomson Financial expected AMD to report, on average, earnings of 22 cents per share on $1.25 billion in revenue.
Earlier this month, the company warned it expected $1.22 billion in revenue. Previously, the company projected second-quarter sales to be flat or down slightly from first-quarter revenue of $1.33 billion.
'We are dissatisfied by not reaching our second-quarter sales target,' said Robert Rivet, AMD's chief financial officer.
Competition is heating up as Intel has dramatically cut prices and is releasing new microprocessors that are expected to be more competitive with AMD's chips for both servers and personal computers.
On Wednesday, Intel reported results that also reflected the tough environment. Its net income for the period was $885 million, down 57 percent from the $2.04 billion in the same period last year. Revenue fell 13 percent to $8 billion.
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