Jan. 22 (Bloomberg) -- Advanced Micro Devices Inc., the second-largest maker of personal-computer processors, reported its ninth consecutive loss after plummeting PC demand forced customers to slash orders.

The fourth-quarter net loss was $1.42 billion, or $2.34 a share, compared with a loss of $1.77 billion, or $3.06, a year earlier, the Sunnyvale, California-based company said today in a statement. Sales, excluding some items, fell to $1.16 billion, a bigger drop than the company predicted last month.

Consumers and businesses are holding off on computer purchases in the industry’s worst slump since at least 2001. AMD and larger rival Intel Corp. are coping with the slowdown by curbing production and eliminating staff. Microsoft Corp., the dominant maker of PC operating systems, announced as many as 5,000 job cuts today after profit shrank last quarter.

“I don’t see any snap back,” said Betsy Van Hees at Caris & Co. The San Francisco-based analyst, an Intel shareholder, advises selling AMD stock. “Demand continues to deteriorate.”

AMD fell 7 cents to $1.95 in late trading after closing at $2.02 at 4 p.m. on the New York Stock Exchange. The stock lost 71 percent of its value in 2008.

Intel Meeting

The company also said that Intel has requested a meeting to discuss AMD’s plans to spin off its chip production, part of an $8.4 billion investment deal with the Abu Dhabi government. Intel is examining whether the change would violate the companies’ technology-licensing deal. The move would shift 3,000 workers to a new company that would own AMD’s plants.

AMD licensed Intel’s so-called X86 technology in 1976, allowing the company to produce processors that are compatible with most PCs. AMD spokesman Drew Prairie said Intel is trying to “cause uncertainty” and that AMD remains on course to close the transaction.

“We have questions about our intellectual-property rights, and we’d like to get those answered,” said Chuck Mulloy, a spokesman for Santa Clara, California-based Intel. “Our intent is not to block the formation of this company; our intent has everything to do with our IP rights.”

AMD didn’t give a detailed forecast, saying only that it expects sales in the current period to fall from the fourth quarter. Revenue typically drops sequentially in the first half, which is less busy for chipmakers than the buildup to the holiday shopping season.

Writedowns

The loss last quarter included $996 million of nonrecurring costs, or $1.64 a share. AMD wrote down its inventory by $227 million and the value of its acquisition of ATI Technologies Inc. by $684 million.

Revenue from processors dropped as the chips’ average selling price declined from a year earlier. The company also sold fewer graphics chips, though it was able to sell them at a higher average price.

AMD had said in December that sales would drop about 25 percent from the $1.59 billion in the third quarter, excluding some revenue from licensing its technology. That would have been about $1.19 billion.

Analysts had predicted a loss of 60 cents a share on sales of $1.2 billion, the average of estimates in a Bloomberg survey. For the current period, they project a loss of 59 cents on sales of $1.08 billion.

AMD may have to keep cutting prices to compete with newer products from Intel and graphics-chip maker Nvidia Corp., putting a further strain on profit. The company may struggle to reach the $1.5 billion in sales it says it needs to make an operating profit, Van Hees said.

The company is trying to regain the 25 percent market share it had in 2006. Since then, AMD has trailed Intel in introducing technology, missed product release targets and had problems with faulty chips.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: January 22, 2009 18:38 EST