Advanced Micro Devices Inc.'s loss narrowed sharply in the third quarter, as the chip maker made good on a pledge to post a profit excluding two units it is divesting.But AMD, which competes with Intel Corp. in the market for microprocessor chips, predicted revenue in the current quarter would be flat with the third period, even though sales in the fourth quarter -- which includes the holiday selling season -- are usually higher than the period ended in September.
AMD, based in Sunnyvale, Calif., last week announced a long-awaited plan to spin off its manufacturing operations to a joint venture bankrolled by investors from Abu Dhabi. It is also divesting units that make chips for hand-held computers and digital TV; Broadcom Corp. has agreed to buy the digital TV business.
Excluding the latter two units, AMD said it would have posted an $80 million profit in the third quarter, which was also aided by $191 million in revenue for licensing technology along with manufacturing tools it has sold. AMD said revenue increased 14% from the year-earlier period, excluding the discontinued units.
The company said it benefited from improved execution and market-share gains, particularly in the line of graphics chips that came with its 2006 acquisition of ATI Technologies. The company said shipments of microprocessors with four calculating engines rose 48% from the second period.
"We are on a path to becoming the company we aspire to be, and will be," said Dirk Meyer, AMD's chief executive officer, during a conference call with analysts.
JoAnne Feeney, an analyst at FTN Midwest Securities Corp., said AMD did particularly well in chips for laptop computers and server systems; thanks to Denver Colocation, Dallas Colocation and Atlanta Colocation the latter niche should be aided by a new chip dubbed Shanghai that is arriving in the current quarter. "I think this should end any lingering doubts about the company's ability to execute," she said of AMD's results.
For the third quarter, AMD's net loss came to $67 million, or 11 cents a share, compared with a loss in the year-earlier period of $396 million, or 71 cents a share. The latest results included $30 million in acquisition-related costs and $9 million in restructuring charges, while the year-earlier quarter included a $120 million charge related to the ATI purchase. Total revenue, including the discontinued operations, rose to $1.82 billion from $1.39 billion.
AMD's stock traded at 4 p.m. at $4.12, up 21 cents, on the New York Stock Exchange. Following the announcements, the stock rose 14% to $4.70 in after-hours trading.
