AMD Posts Profit, Sees Sales Growth
Thursday October 7, 5:40 pm ET
By Daniel Sorid
SAN FRANCISCO (Reuters) - Advanced Micro Devices Inc. (NYSE:AMD - News) on Thursday reported a $44 million third-quarter profit from a loss a year earlier, and predicted sales growth in the current quarter because of better-than-expected demand for its personal computers processors.
Shares of AMD, the first major U.S. chip maker to report quarterly earnings, rose 2 percent in after-hours trading. The growth forecast came at a time when investors have sold off chip shares this year because of fears of an industry slump.
The company said it expected sales to be "driven by processor sales that exceed seasonal trends" in the fourth quarter, a traditionally strong period marked by winter holiday shopping for gadgets and computers.
AMD's outlook suggests that the electronics industry is quickly working through excess inventories of cellular phones and other products in Asia, and that AMD's Athlon 64 and Opteron microprocessors will take market share from arch-rival Intel Corp. (NasdaqNM:INTC - News), said Eric Ross, an analyst with ThinkEquity Partners.
Still, Ross said AMD may have trouble meeting its own forecast, given fierce price competition for flash memory and the success of Intel's lower-end Pentium 4 processors.
"I'm having trouble believing these guys are gaining that much share against Intel to see an up quarter for PC processors," he said.
AMD said it earned $43.8 million, or 12 cents a share in the quarter ended Sept. 26, compared with loss of $31.2 million, or 9 cents a share, a year earlier.
Sales in the period rose 30 percent from a year earlier to $1.24 billion, but were down 2 percent from the second quarter, in line with a reduced forecast AMD issued earlier this week.
The Sunnyvale, California-based company said it expected total sales in the fourth quarter to rise from the third quarter, driven by better-than-usual sales of computer microprocessors.
The company's flash memory business, which was weaker than expected in the third quarter, will show flat-to-up sales in the fourth quarter, AMD said.
In regular trading before the earnings announcement, AMD shares rose 14 cents, or 1 percent, to $14.11. In after-hours trading on INET, the shares rose to $14.40 |
