AMD reports smaller loss, better revenues
The chip company beats expectations for the third quarter, just a week after announcing that it would spin off its manufacturing operations.
Advanced Micro Devices reported a much smaller loss for the third quarter and better-than-expected revenue.
The Sunnyvale, Calif.-based chipmaker reported third-quarter 2008 revenue of $1.776 billion, including process technology license revenue of $191 million.
Revenue increased 32 percent compared to the second quarter of 2008 and 14 percent compared to the third quarter of 2007.
A positive surprise is the net loss, which was significantly smaller than expected. The company reported a net loss of $67 million, or 11 cents per share. Analysts polled by Thomson Reuters had expected a third-quarter loss of 40 cents per share on $1.48 billion in revenue. The company also reached operating profitability in the quarter.
Analysts were impressed by the numbers. "Even in a normal environment this would be a pretty remarkable achievement. In today's environment, it's extraordinary," said Ashok Kumar, an analyst at investment bank Collins Stewart.
"Improved execution across all of our businesses," Robert J. Rivet, AMD's chief financial officer, said in a statement, "was punctuated by a refresh of our graphics product line-up, driving 55 percent sequential revenue growth and market share gains. In addition, customer adoption of our quad-core microprocessors was strong, with unit shipments increasing 46 percent sequentially."
In the second quarter of 2008, AMD had revenue from continuing operations of $1.349 billion and a net loss of $1.189 billion. In the third quarter of 2007, AMD had revenue from continuing operations of $1.558 billion and a net loss of $396 million.
Third-quarter 2008 gross margin was 51 percent, or 45 percent excluding process technology license revenue. This compares favorably to both the second-quarter 2008 non-GAAP gross margin of 37 percent, and the third-quarter 2007 gross margin of 41 percent.
"We achieved a significant milestone with the recent announcement of our Asset Smart strategy, which will transform both AMD and the industry," Dirk Meyer, AMD's president and CEO, said in a statement.
Earlier this month, AMD announced that it was: one for designing chips (AMD), the other for manufacturing them (The Foundry Company). The capital-intensive business of manufacturing chips had been weighing on AMD as it reeled under a $5 billion debt load, partially due to its purchase of ATI Technologies in 2006.
The investment is expected to allow AMD to remain directly involved in chip manufacturing--crucial for competing with Intel.
AMD said it has secured $5.7 billion of "confirmed, pledged investment," with some of the money earmarked for ain Malta, N.Y. It will own part of the new manufacturing entity, and Advanced Technology Investment Co. (ATIC) will own the rest.
In addition, ATIC will commit a minimum of $3.6 billion and up to $6 billion in additional funds over the next five years for the upgrade and expansion of fabrication facilities in Dresden, Germany, and construction the Malta, N.Y., facility.
One of the largest investors, Mubadala Development, now owns 19.3 percent of AMD.