After the close of regular trading, the chipmaker reported a fourth-quarter net income of $177.9 million, or 53 cents per share. Analysts polled by research firm First Call had predicted a profit of 55 cents per share for AMD's December quarter.
Analyst estimates were cut last month after the company warned it would not meet its original fourth-quarter targets because of the widely reported slowdown in PC sales growth. Wednesday's numbers are in line with AMD's revised earnings prediction of 50 cents to 60 cents a share.
AMD shipped nearly 7 million Athlon and Duron processors in the fourth quarter.
With the market for PCs softening, "We gained market share as Athlon demand remained strong, and Duron sales were somewhat better than expected," AMD CEO Jerry Sanders said in a conference call.
Sanders said first-quarter sales on processors will be "no better than flat" compared with the fourth-quarter. AMD, he predicted, will sell about 6 million to 6.5 million chips in the first quarter. Demand for the company's flash memory products is expected to be flat to slightly up in the first quarter, the company said.
Shares of AMD traded at $18.88 in after-hours activity on the Island ECN, immediately following the release of quarterly results. AMD stock rose 8 percent to $18.50 in Wednesday's regular trading, ahead of the earnings report.
On the whole, AMD's outlook for 2001 is unguardedly optimistic.
"We don't see as grim an outlook" as Intel Sanders said. "Actually, the anecdotal evidence?is that the PC market isn't that bad."
Sanders said he expects that AMD's market share gains should "somewhat offset" seasonal reductions in demand in the first quarter and any economic slowdown seen by the company. The company reported a gain of three percentage points to 17 percent market share worldwide for 2000.
AMD said it will be able to take market share from Intel due to a strong lineup of products, which includes faster Athlon and Duron chips.
Sanders predicted Duron will stand up well in the low-cost PC market, where AMD will compete with Intel's Pentium III chip.
"We think the Pentium III is dead meat, and the only weapon they have left is price," Sanders said. "We don't think we have to get into a price war to maintain or gain a little market share."
AMD will ship a 1.33GHz Athlon chip this quarter, followed by 1.4GHz and 1.5GHz Athlons in the second quarter, and a 1.7GHz chip in the second half. The 1.4GHz and 1.5GHz Athlon will be based on a new Athlon processor core code-named Palomino, Sanders said.
By the end of the first quarter, all of the Athlon chips AMD ships will be from its Dresden, Germany, plant and will run at 1GHz or faster, he said.
AMD will then dedicate its plant in Austin, Texas, to manufacturing low-cost Duron chips.
"We certainly feel we can get past 1GHz with Durons in our Texas factory," Sanders said. He said that Duron would pass 900MHz in the next quarter but won't hit 1GHz until the third quarter.
AMD also predicted substantial growth for its flash-memory business, despite a slowdown in demand for the memory technology, which is used to store data in a range of devices, including cellular phones and personal digital assistants.
Despite missing its fourth quarter numbers, AMD maintained a consistent lead over Intel in the chip-speed race and made inroads into the performance segment of the PC market in 2000. Financially, it strung together a series of good quarters, selling out chip inventories and recording its first annual profit since 1995.
But the company hit a wall in the fourth quarter, amid a sagging PC market sparked by a slowing economy and individual troubles such as a shortage of compatible chipsets, scrapped plans for a server processor, and delayed notebook chips.
The chipmaker also announced on Wednesday that handheld computer maker Palm signed on to make AMD its primary provider of flash memory through 2003.