October 16, 2008, 8:55 PM — Advanced Micro Devices reported a narrower loss than expected for its third quarter on increased sales of its microprocessors and graphics chips, the company said Thursday.
It was AMD's eighth consecutive quarterly loss but a much smaller one than the year before. The loss was US$67 million, or $0.11 per share, compared with a loss of $396 million, or $0.71 per share, in the third quarter of 2007. Revenue climbed 14 percent to $1.78 billion, from $1.56 billion a year earlier.
The net loss is based on generally accepted accounting principles. On a non-GAAP basis, excluding a loss of $108 million from discontinued operations, as well as other charges, AMD said it would have reported a profit for the quarter of $80 million.
The revenue and profit figures both came in ahead of analyst forecasts, according to Thomson Reuters.
"AMD had a well-executed third quarter in the context of a challenging environment," CFO Bob Rivet said on a conference call. "We reached our goal of achieving operating profitability."
Revenue from AMD's microprocessor unit climbed 8 percent year over year, to $1.39 billion, while revenue from its graphics business climbed 40 percent to $385 million. The growth came from AMD's quad-core Barcelona server processor, which had its first full quarter of shipments following delays, and from new Radion 4000 graphics chips that shipped during the quarter.
The graphics business, which AMD acquired when it bought ATI Technologies two years ago, turned an operating profit for the first time, Rivet said.
AMD expects servers based on its new Shanghai processor, which uses a more advanced 45-nanometer manufacturing process, to be available in a few weeks, said President and CEO Dirk Meyer. Desktop PCs based on 45-nanometer processors will be available early in the first quarter next year, he said. The number refers to the dimension of circuits etched on the chips, and the more advanced process should mean faster, less power-hungry products.
AMD announced a plan last week to stem its losses by spinning off its chip-manufacturing business into a separate company. Analysts said the move could help AMD return to profitability by freeing it of the costly burden of building and maintaining its own manufacturing plants. AMD would continue to design and sell its chips but have them manufactured by a third party.
AMD's shares were up 5 percent ahead of the financial report Thursday, closing at $4.12. The stock moved 9 percent higher after the report was issued, climbing to $4.50 in after-hours trading.
Financial results are being closely watched this quarter as industry tries to weigh the impact of the emerging financial crisis in the U.S. on customers' IT spending. The news so far has been mixed.
On Tuesday AMD's main rival, Intel, reported third-quarter revenue of $10.2 billion, a record for the company but up just 1 percent from the year earlier. Net income of $2 billion for Intel was up 12 percent from the same quarter in 2007. But Intel said it couldn't predict the impact of the financial crisis on customers going forward, and warned that companies may defer IT purchases.
Last week ERP (enterprise resource planning) software giant SAP warned that its revenue would be lower than expected when it reports earnings later this month, due to a sharp drop off in orders at the end of its quarter.
