14 DAY TRIAL // Advanced Micro Devices reported better than expected third quarter earnings, which came as a surprise for most industry analysts. It seems that the company registered a much smaller loss than originally predicted for the quarter. The Sunnyvale chip manufacturer announced third-quarter 2008 revenue of $1.776 billion, as well as technology license revenue of $191 million. Compared to the second quarter of the year, AMD registered 32 percent increased revenue, and 14 percent increase compared to the third quarter of the last year.
The net loss represented another surprise, as it was significantly smaller than the forecast. While analysts expected a third-quarter loss of 40 cents per share on $1.48 billion in revenue, the actual net loss was $67 million, or 11 cents per share. The company announced operating profitability for the quarter. The surprise these numbers produced was perfectly expressed by Ashok Kumar, an analyst at investment bank Collins Stewart, who said that “even in a normal environment this would be a pretty remarkable achievement. In today's environment, it's extraordinary”.
“Improved execution across all of our businesses,” Robert J. Rivet, AMD's chief financial officer, said in a statement, “was punctuated by a refresh of our graphics product line-up, driving 55 percent sequential revenue growth and market share gains. In addition, customer adoption of our quad-core microprocessors was strong, with unit shipments increasing 46 percent sequentially”.
AMD registered a gross margin of 51 percent during the third quarter 2008, which accounts for 45 percent if the process technology license revenue is excluded. The second-quarter 2008 non-GAAP gross margin was 37 percent, while last year's third quarter gross margin was 41 percent. “We achieved a significant milestone with the recent announcement of our Asset Smart strategy, which will transform both AMD and the industry,” said Dirk Meyer, AMD's president and CEO.
AMD announced earlier this month that it was spinning off its manufacturing facilities into a new entity, called The Foundry Company. The chipmaker had a $5 billion debt load, but the split allowed it to secure $5.7 billion of “confirmed, pledged investment”. The investment comes from Advanced Technology Investment Co., which will own a part of the manufacturing firm, while AMD the rest.