AMD posts quarterly net loss as costs rise

But the second-largest chipmaker beats analyst forecasts for the quarter as gross margins improved.

Advanced Micro Devices, the second-largest maker of computer microprocessors, posted a better-than-expected quarterly loss on Thursday as its gross margins improved.

AMD, which competes with market leader Intel, said its third-quarter net loss was $396 million, or 71 cents per share, compared to a net profit of $136 million, or 27 cents per share, in the year-ago period.

Revenue rose 23 percent to $1.63 billion, beating the average analyst forecast of $1.52 billion according to Reuters Estimates.

"AMD revenue looks good," said Doug Freedman, an analyst with American Technology Research. "They had a fair number of charges again. The thing I would say that's almost encouraging is that some of that is related to severance charges."

AMD reported 22 cents per share in charges related to its acquisition of graphics chip maker ATI, integration, severance and asset impairment.

After excluding these items, AMD's per share loss was 49 cents, which was better than the loss of 61 cents forecast by Wall Street according to Reuters Estimates.

AMD said that in the fourth quarter, which is traditionally its strongest, it expects revenue "to increase in line with seasonality."

Regarding the guidance, Freedman said, "What they're trying to say is that they'll match Intel," with revenue growth of 7 percent. "That shouldn't be hard for them to do given they have an underperforming graphic business."

The results came after Intel posted a 43 percent rise in quarterly income due to strong sales of processors for laptops and market share gains versus AMD. Intel had also given a fourth-quarter outlook that was above Wall Street expectations.

Shares of AMD rose to $14.77 in extended trade. In regular trading, the stock climbed 44 cents, or 3.1 percent, to close at $14.55

Story Copyright © 2007 Reuters Limited. All rights reserved.

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