=DJ AMD's 3Q Business Shows Big Improvement From 2Q
By Mark Boslet Of DOW JONES NEWSWIRES (This article was originally published Thursday)
PALO ALTO, Calif. (Dow Jones)--Advanced Micro Devices Inc. (AMD) narrowed its losses in the third quarter on a big boost in computer and cell-phone chip sales.
AMD, which still posted a net loss of $31 million, or 9 cents a share, appears to be headed toward break-even in the fourth quarter, if the computer and cell-phone markets grow 10% to 15% as the company expects.
For the third quarter, the company's earnings compare with a loss of $254 million, or 74 cents, a year ago. Analysts had projected a loss of 36 cents in this year's quarter.
Revenue for the period ended in September was $945 million, up 88% from $508 million last year. Wall Street expected $859 million, according to Thomson First Call.
"We are seeing the benefits of what's been a very strong back to school season" in computer sales, said Pacific Crest Securities analyst Michael McConnell. "It's a blowout quarter." McConnell doesn't own AMD shares and Pacific Crest does do banking business for the company.
Wednesday, analysts from IDC and Gartner Group said third-quarter PC sales rose between 14.1% and 15.7% worldwide, a pace that was greater than most observers expected.
McConnell said he was surprised at the expansion in AMD's microprocessor sales, which rose 91% to $503 million. The company rolled out a new, high-performance line of Athlon 64 processors, but not until Sept. 23, close to the end of the quarter. So the growth came primarily from its older products.
AMD's flash business also posted a solid increase. Sales rose 124% from a year ago to $424 million, even though a lot of the expansion came as AMD consolidated the FASL LLC operations, a joint venture previously owned by AMD and Fujitsu Ltd. The operations brought about $180 million in revenue.
Still, AMD appeared to hold onto its share of business with cell-phone maker Nokia Corp. (NOK), McConnell said.
AMD Chief Financial Officer Robert Rivet said the company's goal is to "reach sustained profitability as quickly as possible." Reaching break-even from operations appeared possible in the fourth quarter.
The company said on a conference call it sees the computer and cell-phone markets expanding between 10% and 15% in the fourth quarter. It also said it expected its revenue to increase during the period. A 10% increase would push sales over $1 billion.
AMD also anticipated operating expenses to be about $1 billion, the company said, bringing revenue and costs roughly in line.
AMD's longer-term prospects are tied to introduction of the Athlon 64 line of chips for personal computers. AMD Chief Executive Hector Ruiz said the company shipped tens of thousands of these chips in the third quarter and would ship hundreds of thousands in the fourth.
The new chips helped lift the average selling price of AMD's microprocessors, which Gartner Group analyst Martin Reynolds says has been about $60 a chip, substantially less than the $130 competitor Intel Corp. (INTC) gets.
To see that increase, it is important for the company to get enough of the new Athlon 64 FX-51 processor out of the door, Reynolds said.
In after-market trading, AMD shares rose 9%, or $1.26, to $15.22.
- By Mark Boslet, Dow Jones Newswires, 650-496-1366
mark.boslet@dowjones.com
(END) Dow Jones Newswires
October 17, 2003 07:37 ET (11:37 GMT) |
