For the second straight quarter, Advanced Micro Devices (AMD) posted a loss, saying that it lost $611 million (£305.2m) in its chip manufacturing business during the first quarter of 2007.

Financial analysts had expected bad news, since AMD warned them on 9 April that it would miss its revenue forecast of $1.6 billion to $1.7bn. In response, the average earnings estimate was for a loss of $0.48 per share on revenue of $1.26 billion, according to Thomson Financial.

In reality, AMD came in far below that, reporting a loss of $1.11 per share on revenue of $1.23 billion for the quarter ending 31 March. For comparison purposes, AMD's loss was $0.90 per share, excluding $113m in expenses used to acquire ATI and integrate that graphics processing company into AMD's business, Thomson said.

The loss was also far below AMD's performance in the first quarter of 2006, when it earned profit of $185m on revenue of $1.33bn. However, AMD warned analysts not to compare the two figures, since the company began including ATI's revenue in its numbers in October 2006.

AMD also blamed "significantly" lower micro-processor unit shipments and lower selling prices for the loss. In recent months, AMD has been in a price war with rival Intel.

In response to the "disappointing and unacceptable" results, AMD chief financial officer Robert Rivet said in a statement that the company would realign its business model to cut costs. In its warning to analysts, the company had promised to cut its 2007 capital expenditure by $500m and limit hiring to critical positions.