Advanced Micro Devices intends to cut operating expenses $350 million in 2003 and plans to reach a break-even level in the second quarter of that year, President Hector Ruiz told financial analysts Wednesday on a conference call.
AMD's target break-even revenue point is $875 million, due to the reduced costs, said Bob Rivet, senior vice president and chief financial officer.
Part of the reduction will come in "significantly lower capital expenditures in 2003," he said without specifying the amount. AMD will cut capex this year to $750 million from an originally planned $850 million, he added.
The firm increased its R&D spending in the third quarter 24% to $221 million, according to Rivet. "Fourth quarter R&D will be flat to slightly lower," Rivet said.
AMD ended the third quarter with a negative cash flow of $140 million, but the financial officer said the firm hoped to be cash flow neutral by the end of Q2 '03.
The firm received $108 million in asset-based financing in the quarter and has $47 million to come, Rivet said. AMD used its Fab 25 in Austin, Tex. as collateral for the financing, he added.
A major shift in AMD's marketing strategy in launching its next generation Hammer family of processors came to light in the analysts conference call. Rob Herb, executive vice president of sales and marketing, said the Opteron server version of Hammer to be introduced in mid-2003 will precede the Athlon desktop Hammer chip.
Originally the Athlon desktop Hammer was slated to be introduced in Q4 '02 and then slipped to the first quarter of 2003, and now won't come to market until late next year.
Herb said the upcoming Barton version of the K7 Athlon, to debut early in 2003, will provide high performance desktop and workstation capability to carry the Athlon line through the year, so the desktop Barton can wait.
Answering critics who claimed AMD couldn't deliver its new Athlon 2400+ and above processors in volume, Herb said 2 million of these class chips will be produced in the current fourth quarter.