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AMD turning page, hoping for profit by end of 2008

Execs tell analysts that though AMD has some interesting products in the pipeline, the Barcelona fiasco will ensure the company loses money during the first part of 2008.

AMD executives put their best foot forward Thursday during a conference with financial analysts, but only time and a better performance will lift the company out of its 2007 spiral.

The company owned up to its mistakes with Barcelona, its first quad-core server processor, during the conference call. Barcelona will have to be tweaked before it can be sold for general-purpose use, and the revamped chips won't be available until the first quarter of 2008, said Mario Rivas, executive vice president for the computing products group. Systems using Barcelona aren't expected to be available until the second quarter, meaning that for most customers, the chip will arrive a year later than expected.

AMD executives tried to point out all the good things the company had accomplished during 2007 during its presentation at the New York Stock Exchange, and CEO Hector Ruiz vowed to exit 2008 at the helm of a profitable company.

"There are times in your life where you feel that the perspective of those around you is quite a bit different than the perspective you have yourself," said Dirk Meyer, AMD's president, chief operating officer, and heir apparent, during the analyst conference. "We have done a lot of things very well at AMD since Q1 and we have done one thing poorly. We haven't delivered on our quad-core products according to plan."

So what does AMD think it did right? Four of the seven bullet points it cited had to do with market share gains, or market share position. This is true, in that AMD has held pretty steady in the PC market over the past year despite its struggles. The trouble with that, however, is that AMD's gains are mostly at the low, unprofitable end of the PC market, according to data from CurrentAnalysisWest.

Still, the company noted that its average selling prices are "trending" higher, and it can say that because Phenom desktop chips and Barcelona server chips will be in the market soon. Also, it seems like PC demand is actually pretty strong in the face of broader economic uncertainty, as demand for AMD's chips (really, all PC chips) has been strong.

Of course, AMD's first job is to put out chips that work. And on that note, the company seemed quite contrite, but the damage has largely been done.

Looking forward to 2008, one good piece of news is that AMD says it's on track to release 45-nanometer processors around the middle of the year, which means it'll hit its aggressive target for switching from 65nm to 45nm. The number refers to the average size of the structures on the chip, and the smaller you get, the more transistors you can fit onto a chip, improving performance.

The company also revealed plans to ship an eight-core server chip in 2009 called Montreal, and a notebook chip called Swift that will be a result of its Fusion project to integrate the PC processor and the graphics processor.

But AMD said nothing about its so-called "asset-light" strategy, which it has been ducking for months. Earlier this year the company hinted that it was considering plans to outsource more of its chip production to third parties like TSMC or its current partner, Chartered. But Doug Grose, senior vice president of manufacturing and supply-chain management, said the company still isn't ready to talk about what exactly that means.

CNET's Dawn Kawamoto contributed to this report.