AMD tops estimates with $US1.3 billion revenue

AMD tops estimates with $US1.3 billion revenue

AMD beat analyst estimates for financial performance in third-quarter results released Wednesday, with net income of $US134 million on revenue of $US1.33 billion, as it continues to pressure number-one chipmaker, Intel.

AMD's results for the quarter that ended September 30 topped analyst estimates of $US0.24 cents a share on revenue of $US1.31 billion.

"The AMD growth story continues," AMD's CEO, Hector Ruiz, said in a conference call with analysts.

The company's latest results are an improvement over net income of $US44 million on $US1.52 billion in revenue in the same quarter a year ago and net income of $US89 million on $US1.22 billion in the second quarter.

When memory products sales are excluded, AMD's sales grew 9 per cent from the previous quarter and 32 per cent from last year's third quarter, AMD's chief financial officer, Robert Rivet, said in a press release.

However, AMD's operating margins slipped in the third quarter to 51.4 per cent, down from 56.8 per cent in the previous quarter and 55.4 per cent in the year ago quarter. AMD attributes the decline to lower average selling prices for processors used in desktop computers.

AMD has been taking semiconductor market share away from rival Intel in the last year with new dual-core processors, forcing Intel into a defensive posture.

The gross margin slip is evidence of a price battle with Intel, whose dominance in computer microprocessors AMD has been challenging over the last year. AMD grew its share of the market for x86-based servers by 133 per cent to 25.9 per cent in the second quarter of 2006, according to Mercury Research.

Sales revenue for AMD microprocessors used in desktop computers was relatively flat in the third quarter compared to the second, Ruiz said, while revenue and unit sales volume rose by about 50 per cent for notebook computers. Server sales grew, as well, he said, but only by single digits. He was not more specific.

AMD forecasts that growth in fourth quarter sales will be driven, in part, by its $US5.4 billion merger with Canadian graphics chip vendor, ATI Technologies, which is expected to be completed October 23. AMD sees the merger as a way to offer integrated products for the mobile computing and consumer electronics markets.

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