AMD Profits rise to 76 million this year!

[DilTech]

http://www.bloomberg.com/apps/news?p...1KkEE&refer=us

Looks as if AMD is definitely doing better now!

Oct. 11 (Bloomberg) -- Advanced Micro Devices Inc., the No. 2 maker of personal-computer processors, said third-quarter profit rose 73 percent because of sales of chips used in laptop and server computers.

Net income rose to $76 million, or 18 cents a share, from $43.9 million, or 12 cents, a year earlier, the Sunnyvale, California-based company said in a statement. Sales gained 23 percent to $1.52 billion from $1.24 billion. Profit and sales exceeded analysts' average estimates from Thomson Financial.

Chief Executive Officer Hector Ruiz introduced higher-value products including the Opteron server chip and Turion laptop processor that have helped the company gain ground on No. 1 Intel Corp. Analysts including Morgan Stanley's Mark Edelstone raised their estimates in the past week, citing higher prices of flash memory chips used in cell phones and orders for server chips.

``It was a very strong performance in microprocessors and an expected but welcome improvement in what's been a disaster in flash memory,'' said Rick Whittington, an analyst at Caris & Co. in New York, who rates the shares ``buy'' and doesn't own them.

Shares of Advanced Micro Devices fell 65 cents to $23.35 in extended trading after results were announced. They rose 18 cents to $23.29 at 4 p.m. in New York Stock Exchange composite trading and have gained 5.8 percent this year.

Gross Margin

Gross margin, the percentage of sales left after production costs, widened to 41 percent from 40 percent in the third quarter and was unchanged from a year earlier.

``If there's a disappointment, it's that gross margin didn't increase more with the big elevation in revenues,'' Whittington said. Sales of Advanced Micro's Sempron chip, used in low-priced PCs in emerging markets such as China, probably held back profit margins, he said.

The company was expected to have a profit of 8 cents a share, the average estimate of 31 analysts surveyed by Thomson Financial. Sales were expected to increase to $1.38 billion, the average of 27 estimates.

Advanced Micro has gained market share in server chips, the processors used in computers that run corporate networks and Web sites, by bringing new features to the market quicker, such as models that can run multiple programs faster.

``I expect AMD will sustain its server gains for the next year,'' said Ken Smith, a fund manager at Munder Capital Management, which owns Advanced Micro shares as part of the $38.5 billion it has under management. ``Customers have desired a second source to Intel for years and AMD finally has a lead and a credible product road map.'' He spoke before the results came out.

Server Chips

Total sales of server chips will increase 13 percent to $4.3 billion this year, according to Mercury Research, based in Cave Creek, Arizona. Intel's market share fell 3.8 percentage points last quarter to 89 percent, according to Mercury.

Intel and Advanced Micro are the only major makers of the microprocessors that are the main component of laptop, desktop and server computers.

Advanced Micro cited demand for its Opteron server chip and Turion laptop processor. Sales in the microprocessor division rose 44 percent to $969 million from $673 million a year earlier. Operating income in the division more than doubled to $209 million from $89 million.

For the fourth quarter, microprocessor sales should increase by 7 percent to 13 percent to $1.04 billion to $1.09 billion from the period just ended, the company said in the statement. On a year-over-year basis, sales should gain as much as 50 percent.

Memory Chips

Memory-chip revenue fell to $516 million from $538 million a year earlier, resulting in an operating loss of $50 million compared with a profit a year earlier. The loss narrowed from $90 million in the prior three months.

Advanced Micro's Chief Financial Officer, Robert Rivet, said on a conference call that flash memory prices had stabilized and the division sold 15 percent more units than in the second quarter.

The flash-memory business has posted losses in a market-share tussle with larger rival Intel.

Advanced Micro Devices said in April it planned a public share offering of the 12-year-old flash-memory unit, called Spansion, and will be a minority investor after the sale.

``We think the flash business is doing a little bit better, Eric Ross, an analyst at ThinkEquity Partners in New York, said before the results were announced.

Because of the pending share sale, the company didn't forecast memory sales this quarter.

[rick_fx]

Congrats to AMD!

[en4cer]

Some GREAT news! glad to hear AMD is doing well.

[Tim]

I must say that over the years AMD is getting stronger and stronger...an incredible feat in a world once dominated by Intel.....

Just GREAT CPU's like we all know

Good job AMD

[dsecrieru]

I suspect it's peanuts compared to how much Intel is making, but nevertheless, the more, the better!

[metro.cl]

time to lower the cpus price

[slider99]

Nice going there AMD! Intel needs some competition.

[Piotrsama]

Originally Posted by metro.cl

time to lower the cpus price

Not before AMD hits 65nm.... I'm guessing

[Revv23]

yeah i dont see amd lowering prices anytime soon, especially with no competition, i expect them to use thier power in the desktop market to help support thier mobile campaign.

[slider99]

No, AMD shouldn't lower their prices. They should collect some serious revenues instead and invest in some R&D. Still, I'd rather have cheaper CPUs than extreme AMD dividends.

[onewingedangel]

for AMD to make a profit at all is very good, considering their managing to punch above their weight and keep up with intel. But at the same time, how long do you think it takes intel to make 76 million in profits? a week or two? Its good that amd have been able to keep up with intel thanks to their excellent k8 generation, but any lack of r+d expenditure now would boost their bottom line temporarily but if intel overtakes them technologically by any significant margin, amd would lose any ability to compete with intel in any area other than undercutting intels prices like in the athlon xp era. 76 million of profits is nice, but really they should be aiming to break even (after paying off the interest on those enourmous debts they have) and keep ahead of intel. Considering the difference in scale between their resources and intels where intel can simply throw far more money than intel turn over into r+d pretty comfortably (and keep huge money pits like itanium around just to save face) - Amd simply cant rest on their laurels thanks to the opteron/a64 architecture - a one generation lead means very little.

[LOE]

well done AMD

I hope fab36 will open smoothly and start making the 65nm chips - I am planning an upgrade this spring and am willing to buy a 65nm M2 DC chip that OCs lika a venice

[shadowing]

Congrats to AMD! Hopefully, they can turn out 100 million soon.