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Strong Mobile Sales Boost AMD Earnings

Posted by iTech - 2005-10-12

Strong processor sales -- particularly in the mobile space -- helped Advanced Micro Devices boost its third quarter net income by a whopping 73 percent.

The microprocessor manufacturer reported net income of $76 million, or 18 cents per share, up from $44 million, or 12 cents per share, in the third quarter 2004. The company said third-quarter sales were $1.52 billion, up 23 percent from the same quarter in 2004 and 21 percent from the second quarter 2005.

The numbers significantly exceeded the estimates of analysts polled by Thomson/First Call, who had expected 8 cents per share.

According to AMD CEO Hector Ruiz, this marks the ninth consecutive quarter with at least 20 percent year over year sales growth. Ruiz said revenue for the Turion 64 mobile processor was up 72 percent this quarter. That processor shipped in the first quarter but built momentum among OEMs in the second quarter. Sales spiked in the most recent, third quarter after corporate customers had time to evaluate Turion-based products and consumers picked up models during the back-to-school selling period, Ruiz explained.

"It also shows that the market needs an alternative in the mobile space," he said.

In its processor business, AMD still maintains the largest share in desktops. Ruiz said he expects higher growth to continue in servers and mobile computing.

Though Intel this week shipped its first dual core processors for one- and two-way systems, Ruiz noted that AMD already supports up to eight-way servers with its Opteron dual-core processors. What's more, AMD still can exploit SMB opportunities in one- to two-way servers, he said. Intel's dual-core chips for four- to eight-way servers are due within 60 days.

AMD also expects growth via Athlon desktops and Turion notebook systems, through its efforts to attract enterprise clients that already use Opteron-based servers, Ruiz said. More than 85 of Forbes Global 2000 now use AMD products, according to AMD. New customers include UPS, Fidelity National Financial and Liberty Media.

In addition to a strong showing in its processor group, AMD saw a small improvement in its troubled memory division. Sales for the Memory Products Group fell by 4 percent from the third quarter of 2004 but increased by 12 percent compared with the second quarter of 2005. The slight improvement was driven by higher overhaul unit sales, particularly for AMD's MirrorBit Flash devices.

Looking forward, AMD expects fourth-quarter sales to grow 7 percent to 13 percent over the previous third quarter. That would be a 42 percent to 50 percent increase from the fourth quarter of 2004.



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