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AMD CEO Says More Time Needed Before New Chips Bolster Sales

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Sept. 4 (Bloomberg) -- Advanced Micro Devices Inc. faces “bumps in the road” as it offers dated technology, with new chip designs still more than a year away, Chief Executive Officer Rory Read said.

The CEO of the Sunnyvale, California-based company said in an interview today that AMD still has to get through 18 months of old technology before the new chips are available.

“There’s going to be bumps,” Read said in the interview at Bloomberg LP’s headquarters in New York.

The former International Business Machines Corp. and Lenovo Group Ltd. executive has just begun his fourth year of trying to turn around AMD, which has suffered because of its rivalry with Intel Corp. Under Read, AMD is working to get more of its sales from markets where it doesn’t directly compete with the world’s largest chipmaker, such as game consoles and industrial and medical equipment.

While those initiatives have paid off by winning customers including Sony Corp. and Microsoft Corp., which have both based their newest video-game consoles on chips made by Read’s company, AMD’s earnings remain dependent on a shrinking personal-computer market where Intel has been faster to update its product lineup with better-performing processors. The two companies are the only remaining makers of processors that are the main components of PCs. Intel has more than 80 percent of that market, according to researcher IDC.

Cash Burn

Read said he’s restructured AMD’s debt so it’s no longer burning through cash reserves and is delivering predictable sales growth and improved profitability. As of the end of June, AMD had $948 million in cash and equivalents and $2.21 billion in total debt, compared with $1.12 billion in cash and $2.05 billion in debt a year earlier, according to data compiled by Bloomberg.

AMD engineers are now proving they can deliver new designs on time, something that didn’t happen in the past, Read said. New chips will help AMD gain in new areas and improve its performance in PCs and servers from next year increasing into 2016, he said.

“The execution is much better,” he said.

AMD shares fell 1 percent to $4.15 at the close in New York. The stock has gained 7.2 percent this year.

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

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward

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