14 DAY TRIAL // The two major players on the microprocessor market, Intel and AMD, have both announced their profits for the recently ended third quarter of the year. The results unveiled by the chipmakers to the press and analysts came as a bit of a surprise. While Intel scored quite nicely in times of economic crisis, AMD had surprisingly small losses compared to the expectations, and even managed to register operating profitability.
Intel has been leading the CPU market for quite some time now. The company registered $2 billion in profits on $10.2 billion in revenue, which translates into a 12 percent rise in profit and 1 percent rise in revenue. Also, the chipmaker announced 59 percent high gross margin. AMD, on the other hand, posted revenues of $1.78 billion and announced $67 million loss, which is $100 million less than expected. Also, the third quarter of 2008 is the first when AMD registers operating profitability in a long time, with a $131 million operating income. The second largest chip manufacturer in the world announced a 51 percent gross margin.
Both companies did well during the recently closed financial period, no doubt about it, and while AMD managed to put an end to its series of bad quarters, Intel strengthened its leading position. But, when it comes to the reason for the chipmakers' good revenues, things would rather look better for AMD than for Intel. It seems all that struggle we've seen from the Sunnyvale company lately has started to finally pay out.
AMD marked a very good quarter in three business areas. Its server CPU Barcelona saw steady demand throughout the entire quarter, the graphics division ATI registered profit for the first time since it was acquired, and the company also received a one-time license fee for its 130nm SOI technology. Intel, on the other hand, registered $200 million in revenue from its Atom processors and chipsets. If Atom is removed from Intel’s CPU sales, the revenue is steady compared to previous quarters.
Nevertheless, Intel still dictates on the CPU market and is the one that sets the prices as well. That still holds AMD's CPU business on a flat line, although there are signs of improvement, compared to the second quarter of the year. The Sunnyvale-based did great on the GPU segment, going up from both the previous quarter and last year. The Radeon 4000-series graphics cards took the lead on the market and the company will work hard to keep it on the poll position for a long time.
The predictions for the fourth quarter of the year are rather vague for both companies. AMD is in a full spinning off process and that will affect its Q4 profits. The AMD/Foundry Co. split is expected to be finalized in early 2009. Until that happens, the chipmaker's forecast is near the Q3 results, namely revenue of $1.58 billion. While this quarter may not mark profit, Q1 2009 is expected to do so. As for Intel, the revenue predicted for Q4 2008 is between $10.1 and $10.9 billion. Given the fact that this quarter is usually a very strong one, the predictions are quite low. But we should not forget that the whole IT market is going through a rough period, and that will have a great impact on Intel's business, as well as on AMD's.