Aided by chip sales, AMD posts net profit

Company says sales of its Opteron, Athlon, Turion and Sempron processors increased 38 percent over the same period last year.

Michael Singer
Michael Singer Staff Writer, CNET News.com
2 min read
Advanced Micro Devices on Wednesday reported better-than-expected second-quarter earnings, casting some doubt on its claims that rival Intel has a monopolistic grip on the PC industry.

The company said it made sales of $1.26 billion with a net income of $11 million, which amounts to 3 cents per share. Analysts following the Sunnyvale, Calif.-based semiconductor maker expected the company to post a loss of 5 cents a share.

AMD said sales of its Opteron, Athlon, Turion and Sempron processors increased 38 percent over the same period last year, with revenue hitting the $767 million mark. The company attributed the increase to record server and mobile processor sales, a 6 percent higher overall average selling price, and record sales to its largest customers including Hewlett-Packard and Sun Microsystems.

"Strong dual-core AMD Opteron processor sales contributed to an 89 percent revenue increase in our server products from the prior quarter," Bob Rivet, AMD's chief financial officer, said in a statement. "This demonstrates the acceptance of the AMD64 platform by enterprise customers. Likewise, the AMD Turion64 processor captured more than 60 design wins and drove record mobile sales in the thin-and-light mobile PC category."

The company said sales were especially strong in China and North America but were flat overall when compared with the second quarter of 2004. AMD said it now expects microprocessor sales growth to "exceed" normal seasonal patterns.

Despite the positive financial news, strong earnings seem to contradict AMD's recent claims that Intel is using monopolistic business practices to squeeze it of the market. Intel processors account for more than 80 percent of the computers running x86-based chips, according to IDC analysts.

In the last 30 days, AMD filed lawsuits in the United States and Japan alleging scare tactics and coercion against customers that do business with AMD. The company also applauded an early morning raid by European Commission officials on four Intel offices in Germany, Italy, Spain and the United Kingdom this week.

One of AMD's few losing divisions is its memory products group, whose Spansion flash memory business is preparing for a $600 million initial public offering of its common stock. The group, which also handles AMD's MirrorBit Flash memory sales, said it has an operating loss of $90 million, as compared with an operating loss of $110 million in the first quarter of 2005.

AMD CEO Hector Ruiz said his company's other losing division--Personal Connectivity Solutions Group--is a long-term bet the company is taking on the x86 microprocessor architecture.

Shares of AMD stock were up 2.3 percent to $19.70 in late afternoon trades.