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Last Updated: Tuesday, 11 January, 2005, 21:57 GMT
AMD shares fall on income warning
Lance Armstrong unveils AMD's Turion 64
AMD share of the processor market is increasing
Shares in US chipmaker Advanced Micro Devices (AMD) fell 26% on Tuesday after the firm issued a profits warning.

AMD said a "challenging" market for its flash memory products - used in devices like mobile phones and digital cameras - would hit earnings.

Its stock price has doubled recently as a new 64-bit computer processor helped the firm increase market share.

The AMD news came as the world's biggest chipmaker Intel said profits had fallen due to sector competition.

Intel said turnover of $9.6bn (5.1bn) in the last three months of 2004 was a record for a quarterly period.

But its profits were $2.1bn, compared to $2.2bn in the same period of 2003.

The overall figures, however, were higher-than-expected and boosted by sales of Centrino chips used in notebook computers.

Intel shares, which had fallen on the AMD announcement, recovered Tuesday's losses as they moved up 3% in after hours electronic trading.

Price pressures

AMD said fourth quarter profits were expected to be "down significantly" from its third quarter totals of $68.4m.

It said its flash memory chip division would record lower sales and an operating loss in the fourth quarter.

"We suspect that difficult pricing from Intel is the primary culprit," analyst Richard Shannon at Piper Jaffray said.

The attention on flash memory production came as Apple unveiled the iPod shuffle, a new digital music player using the cheaper storage rather than hard drives, which are in more expensive iPods.

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