AMD Smashes Estimates In Q3

SAN JOSE, Calif. — Propelled by its microprocessor business, Advanced Micro Devices Inc. (AMD) smashed Wall Street’s expectations by reporting sales of $1.523 billion and net income of $76 million, or $0.18 per diluted share, for the third quarter.

AMD (Sunnyvale, Calif.) was projected to earn $0.08 a share on sales of $1.38 billion for the period, according to analysts.

Third quarter sales were up 23 percent compared to the third quarter of 2004 and increased 21 percent from the second quarter of 2005.

In the third quarter of 2004, AMD reported sales of $1.239 billion and net income of $44 million, or $0.12 per diluted share. In the second quarter of 2005, AMD reported sales of $1.260 billion and net income of $11 million, or $0.03 per share.

"This was another record-breaking quarter for AMD's microprocessor business," said Robert J. Rivet, AMD's chief financial officer, in a statement."Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth of 44 percent compared to the third quarter of 2004 and 26 percent compared to the second quarter of 2005,” he said. “We established new quarterly records in unit and dollar sales, gross margin and operating income."

On the down side, AMD’s flash-memory business remains in the tank. "Memory Products Group sales decreased 4 percent from the third quarter of 2004 but increased by 12 percent compared to the second quarter of 2005,” he said.

Computation Product Group (CPG) sales of $969 million increased 44 percent from $673 million in the third quarter of 2004 and increased 26 percent from $767 million in the second quarter of 2005. CPG generated record operating income of $209 million in the third quarter, up from $89 million in the third quarter of 2004 and $110 million in the second quarter of 2005, according to AMD.

Memory Products Group (MPG) sales of $516 million decreased 4 percent from $538 million in the third quarter of 2004 and increased 12 percent from $462 million in the second quarter of 2005. MPG reduced its operating loss to $50 million, from an operating loss of $90 million in the second quarter of 2005.

AMD expects fourth quarter microprocessor sales to grow between 7-to-13 percent, compared to the third quarter of 2005, which is a 42-to-50 percent increase from the fourth quarter of 2004.The company’s flash-memory unit, Spansion LCC, is in the midst of filing an initial public offering (IPO). Because of its S-1 filing, AMD is not providing guidance for the flash memory business.