AMD narrows loss, but spinoff weighs on chip maker

October 14, 2010 By JORDAN ROBERTSON , AP Technology Writer

(AP) -- Advanced Micro Devices Inc. narrowed its third-quarter loss slightly, as the chip maker's remaining stake in factories it spun off last year dragged down the results.

Ignoring the baggage from the spinoff, AMD said Thursday it would have earned more than Wall Street expected, a sign the company is getting better at squeezing profit out of the remaining business.

AMD shares rose 33 cents, or 4.6 percent, to $7.47 in extended trading, after the release of the results.

AMD makes microprocessors, the "brains" of computers, and graphics processors. Its numbers supply fresh evidence that corporate spending is propping up the computer industry as consumer demand sags.

Consumers buoyed the industry during the recession, but backed off a bit this summer because of mounting economic anxieties and the emergence of the iPad. Meanwhile, corporate orders have emerged from a deep freeze, but there are fears they could slow down again as businesses finish a cycle of replacing old machines.

AMD said it lost $118 million, or 17 cents per share, compared to $128 million, or 18 cents per share, a year ago.

Excluding one-time items and the factory business, the company earned 15 cents per share. Analysts on average expected earnings of 6 cents per share, roughly on the same basis as the company, according to a survey by Thomson Reuters.

Revenue rose 16 percent to $1.62 billion, slightly higher than the $1.61 billion analysts expected.

However, AMD said fourth-quarter revenue would be about the same as the third quarter, while analysts had been expecting a higher figure - $1.67 billion.

AMD's numbers support trends laid out by its main rival, Intel Corp.

Both companies warned Wall Street that they were dinged weak back-to-school computer buying, cutting their third-quarter guidance when it became clear that consumers weren't buying as many new PCs as expected, and PC makers curbed orders for new chips.

But recent data show that things improved as summer turned to fall, providing some cautious optimism about the holidays, the other all-important shopping season for electronics companies.

Intel reported Tuesday that its third-quarter net income leaped 59 percent in part on strong sales of server chips, which tend to be more expensive and more profitable than chips for consumer computers. The midpoint of its guidance for the fourth quarter topped analyst expectations, and market research firm IDC and Intel noted that consumer sales in September were stronger than expected.

AMD is a far different company than it was a few years ago. The $5.6 billion acquisition of ATI Technologies in 2006 and technical missteps took it close to collapse. Now, ATI is proving to be a valuable wedge against Intel in graphics technology.

To unload debt and free itself from the cost of keeping its factories on the cutting edge, AMD spun them off into a separate company called GlobalFoundries Inc. in 2009. The investment arm of the Persian Gulf state of Abu Dhabi took the majority stake.

AMD still owns about 30 percent of GlobalFoundries and has to account for the investment in its results. In the latest period, AMD recorded a $186 million non-cash loss from GlobalFoundries. That was the primary reason it reported an overall loss.

AMD, which is based in based in Sunnyvale, ended the latest quarter with $1.73 billion in cash and cash equivalents and added 372 employees to bring its total work force to 11,021.

Explore further: AMD sales better than expected, CPU demand rises


Related Stories

AMD sales better than expected, CPU demand rises

October 15, 2009

(AP) -- Advanced Micro Devices Inc. lost money in the third quarter but said Thursday that sales were stronger than expected, adding to mounting evidence that consumer spending is fueling a turnaround in the personal computer ...

AMD whittles 2Q loss as chip sales rebound

July 15, 2010

(AP) -- Advanced Micro Devices Inc. shrank its second-quarter loss on reviving sales of computers that use its chips and a wrenching years-long effort to shed costs.

AMD stock sinks on profit-margin worries

July 21, 2009

(AP) -- Advanced Micro Devices Inc. narrowed its loss in the second quarter, though not by as much as Wall Street hoped. Its sales slumped 13 percent.

TI 2Q revenue rises 42 pct as demand roars back

July 19, 2010

(AP) -- Texas Instruments Inc.' second-quarter income and revenue jumped as demand continued to recover after the recession. The company predicted even better results in the new quarter.

Texas Instruments 2Q profit falls 56 percent

July 20, 2009

(AP) -- Chip maker Texas Instruments says its second-quarter earnings fell 56 percent from a year ago, clipped by a weak economy that the company expects will "take some time" to strengthen.

Recommended for you

Technology near for real-time TV political fact checks

January 18, 2019

A Duke University team expects to have a product available for election year that will allow television networks to offer real-time fact checks onscreen when a politician makes a questionable claim during a speech or debate.

Privacy becomes a selling point at tech show

January 7, 2019

Apple is not among the exhibitors at the 2019 Consumer Electronics Show, but that didn't prevent the iPhone maker from sending a message to attendees on a large billboard.

China's Huawei unveils chip for global big data market

January 7, 2019

Huawei Technologies Ltd. showed off a new processor chip for data centers and cloud computing Monday, expanding into new and growing markets despite Western warnings the company might be a security risk.


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.