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To: Return to Sender who wrote (29937)	4/12/2006 8:37:36 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95432

AMD has Q1 profit, sees Q2 sales flat to down from Q1 Wed Apr 12, 2006 8:29 PM ET By Scott Hillis yahoo.reuters.com UPDATE 3-AMD has Q1 profit, sees Q2 sales flat to down from Q1 UPDATE 2-AMD posts quarterly profit, reverses year-ago loss SAN FRANCISCO, April 12 (Reuters) - Advanced Micro Devices Inc. (AMD.N: Quote, Profile, Research) reported a first-quarter profit on Wednesday, but the maker of computer processors issued a sales forecast that was below analysts' consensus estimates, and its shares fell. First quarter sales were unchanged from the fourth quarter, and AMD said it expected second-quarter sales to be flat to slightly down from the first quarter, though they would be up about 65 percent from a year earlier. "The outlook was cautious as expected, given the price pressure coming from Intel (Corp)," said Douglas Freedman, an analyst with American Technology Research. Analysts' consensus estimate was for second quarter sales of $1.34 billion, according to Reuters Estimates. Shares of AMD fell 2 percent in after-hours trade. "What they turned in was very mixed, strong earnings per share, but revenues were just in line with expectations and revenue guidance was actually below consensus," said Cody Acree, an analyst with Stifel Nicolaus. "To some extent they are victims of their own success." For its first quarter, AMD had a net profit of $184.5 million, or 38 cents per diluted share, compared with a loss of $17.4 million, or 4 cents per share, a year earlier. AMD said the most recent quarter included expenses of $15 million in stock-based compensation and $20 million associated with the partial redemption of senior notes. Excluding special charges, analysts had been looking for a profit of $129.9 million, or 29 cents per share, according to Reuters Estimates. Net sales were $1.33 billion, up from $1.23 billion a year ago, when the company also booked revenue from its Spansion memory chip unit it spun out last year. Excluding memory sales, year-ago sales were $780 million. AMD has been making steady inroads against its much larger rival Intel, which has posted disappointing profit and revenue for a couple quarters. Over the past year, AMD shares have more than doubled, while Intel's have fallen 16 percent. "Managing to keep flat revenue quarter-on-quarter in such an aggressive environment is quite an accomplishment for AMD," said JoAnne Feeney, vice president of research at Punk, Ziegel & Co. Thanks to power usage and performance advantages, AMD began taking market share from Intel in the market for server computers that run corporate networks, and it soon extended those gains to desktop and notebook computers. AMD also said that gross profit margins increased to 58.5 percent from 57.3 percent in the fourth quarter. "Gross margin clearly surprised to the upside, and I think that comes from the fact that they've been getting better utilization" of their chip factories, Freedman said. AMD's stock is more richly valued than Intel's, trading at 25 times expected 2006 profit, compared to 19 times for Intel. However, some analysts have adopted a cautious outlook on AMD given Intel's aggressive price cuts and upcoming lineup of chips that should narrow the performance gap with AMD. "Investors are going to be concerned if this is the last good quarter out of AMD," Freedman said. Shares of AMD fell 72 cents, or 2 percent, to $34.70 in after-hours trade on Inet after closing at $35.42 in regular trading on the New York Stock Exchange. © Reuters 2006. All Rights Reserved. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq and all other quotes delayed by at least 15 minutes. Reuters does not endorse the views or opinions given by any third party content provider