AMD 1995 Annual Report Download - page 217

TO OUR FELLOW
shareholders
In 1995 the worldwide semiconductor industry experienced a remarkable 42
percent growth in revenues. Robust unit demand from a strong and
increasingly memory-hungry personal computer market led to shortages and
uncharacteristically stable prices for DRAMs (dynamic random-access
memories). Led by 70 percent growth in the DRAM sector, the semiconductor
industry had a strong wind at its back.
AMD developed a rip in its mainsail, and we didn't catch the wind. Our
revenue growth was an unremarkable 14 percent.
The rip in our mainsail was our tardiness in bringing to market our fifth-
generation, AMD-K5(TM) microprocessor, the first member of our K86 RISC
SUPERSCALAR(TM) family. In the first half of the year, sales of Am486(R)
microprocessors were robust and made substantial contributions to earnings.
In the second half, as demand shifted rapidly to the fifth-generation
Pentium processor, prices for 486 devices declined sharply, and more
importantly, unit demand dropped. Our difficulties in the microprocessor
arena masked the outstanding success we achieved in the remainder of our
businesses, which, in the aggregate, achieved a 36 percent growth rate over
the prior year.
Revenues of $2,429,724,000 resulted in net income of $300,521,000, or $2.81
per share on a fully diluted basis for 1995. For the prior year, AMD
reported revenues of $2,134,659,000 and net income of $305,266,000, or
$2.92 per share fully diluted.
Personal computers, with worldwide sales in excess of 65 million units in
1995 and projected to reach 100 million units in 1998, represent AMD's
greatest opportunity. Microsoft(R) Windows(R)-compatible microprocessors
are our strategic thrust in this market.
AMD has a singular opportunity in the PC market, where intellectual
property requirements impose high barriers to market entry and limit the
number of major
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 1996