Thursday, June 24, 1999

"A man can succeed at almost anything for which he has unlimited enthusiasm." -- Charles Schwab

Latest Market Numbers

AMD Disappoints Again

Shares of chip maker Advanced Micro Devices (NYSE: AMD) will likely head south today following the company's warning late yesterday that it will report a second-quarter operating loss of around $200 million with revenues falling short of $600 million. That means a loss per share of $1.36, more than three times worse than analysts' mean estimate of a loss of $0.40 a share. AMD fell $1 1/16, or 5.5%, yesterday to $18 3/16 on rumors of an impending earnings warning.

In the same year-earlier quarter, AMD posted a loss of $64.6 million, or $0.45 a share, on revenues of $526.5 million. The company attributed the dismal performance to a "sharp decline" in average selling prices for its AMD-K6 family of processors and unit shipments that are "substantially below" expectations. Average selling prices have dropped to around $60 from $78 in the first quarter and $105 a year ago. CEO Jerry Sanders predicted that K6 prices will continue to fall for the remainder of the year.

The company admitted that pressure came from rival Intel's (Nasdaq: INTC) "very aggressive pricing" on its Celeron chips. Heavy discounting of Cyrix processors by National Semiconductor (NYSE: NSM) as it exits the market further exacerbated an already bad situation for AMD.

AMD is counting on its new Athlon chip, formerly called the K7 processor, to come to the rescue. The company announced that it has begun shipping the chip to PC makers, and the chip will be available to end users by the third quarter. Athlon is the company's fastest and most expensive chip yet and, more importantly, it tops Intel's current offerings. Athlon will cost $699 for the 600 megahertz (MHz) version, $479 for the 550 MHz, and $324 for the 500 MHz. A 700 MHz model is due out in the fourth quarter.

News To Go

Soft-drink giant Coca-Cola (NYSE: KO) won clearance from the French and Belgian governments to resume sales and production of its products, ending a week-and-a-half ban that started after some consumers allegedly became ill after drinking Coke products. Coke CEO Doug Ivester assured consumers that "Our products are completely safe, both in Belgium and worldwide.'' Ivester added that he doesn't expect any long-term impact on sales and that he still anticipates doubling international sales in the next 10 years.

Qwest Communications International (Nasdaq: QWST) raised its unsolicited bids for US WEST (NYSE: USW) and Frontier Corp. (NYSE: FRO) to about $47 billion in cash and stock from about $43 billion. It's now offering $68 in cash and stock for each share of Frontier -- an 8% premium over Global Crossing's (Nasdaq: GBLX) rival $63-a-share offer. Qwest is offering $69 a share in stock for US WEST, topping Global Crossing's bid, currently valued at roughly $61 a share.

Micron Technology (NYSE: MU) reported a fiscal Q3 loss of $0.10 a share versus a loss of $0.51 last year. Analysts had expected the company to break even this quarter. Micron blamed pricing pressures for semiconductors as well as all of its PC product lines.

Internet search engine and portal Lycos (Nasdaq: LCOS) is considering spinning out its European joint venture with German media giant Bertelsmann AG. Lycos Europe reportedly will be taken public in Germany early this fall.

Publishing giant Gannett Co. (NYSE: GCI) announced it will acquire Newsquest Plc of the U.K. for about 922 million pounds, or US$1.5 billion, in cash plus assumption of debt. Newsquest is the largest publisher of regional newspapers in England and the third largest in the U.K.

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor