Strong revenue gains help AMD narrow third-quarter loss

Advanced Micro Devices has narrowed its third-quarter loss on strong increases in revenue from its processors and flash memory...

Advanced Micro Devices has narrowed its third-quarter loss on strong increases in revenue from its processors and flash memory business.

Third-quarter revenue came in at $954m, up 88% from the same period last year. Net loss was $31m for the quarter, an improvement over the $254m lost in the third quarter of last year.

"Our progress this past quarter was an excellent example of what I hope you will soon recognise as the new AMD," said president and chief executive officer Hector Ruiz.

Sales from microprocessors and chipsets increased 91% $503m, and the division posted an operating profit of $19m. Last year AMD was forced to cut third-quarter production after overestimating demand for its processors, which accounted for weaker-than-expected revenue and losses.

AMD introduced the Athlon 64 processor at the end of last month, too late for it to have any real impact on the company's finances, but shipments of Opteron, the server version of AMD's 64-bit technology, were strong in the past quarter.

Chipset and motherboard manufacturers expressed concerns about a lack of Athlon 64 chips in the market after the launch. "We underanticipated demand, and we're ramping as fast as we can to try and improve on that," Ruiz said.

The company shipped "tens of thousands" of Athlon 64 processors in the third quarter, and expects to ship "hundreds of thousands" by the end of the year.

During the third quarter, FASL, AMD's flash memory joint venture with Fujitsu began operations as a combined company. It combines the production and distribution of both companies' flash memory products, and AMD owns 60% of the joint venture.

FASL's revenues and costs were included in AMD's financial results for the first time this quarter, helping to boost revenues.

AMD's Spansion flash memory brand is now the world's number one NOR flash brand, and the average selling prices of Spansion products grew in the third quarter. The flash memory business contributed $424m to AMD's revenues, but lost money.

The company expects fourth-quarter 2003 revenue to improve based on seasonal trends and the increased number of Athlon 64 processors available to customers. Several PC manufacturers, including Hewlett-Packard and Fujitsu Siemens will ship Athlon 64 systems in the fourth quarter.

By the end of the first half of next year, half of the processors AMD manufactures will be Athlon 64 chips. The company's 90-nanometer process technology rollout is also scheduled for the first half of 2004, but AMD did not expect to start making chips from 300mm wafers until it moves to a 65-nanometer process in 2005 or 2006.

Tom Krazit writes for IDG News Service

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