Distanced From Foundry Biz, AMD Beats Street
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AMD (NYSE: AMD) slowed the bleeding during its third quarter, reporting a net loss of $128 million, or $0.18 per share -- ahead of Wall Street expectations.
That performance came in part due to the $54 million, or $0.08 per share, that AMD booked from a $66 million gain through debt repurchasing.
Analysts had expected a loss of $0.42 per share, according to Thomson Financial.
But there's a better reason for celebration: On a non-GAAP basis, the company's core, non-foundry business posted a profit, with income of $2 million, compared to a loss of $244 million in the previous quarter.
The figures also represent a marked improvement over last quarter, when the company posted a net loss of $330 million, while its operating loss declined from $249 million to $77 million during the same time frame. A year earlier, AMD posted a net loss of $134 million with operating income of $122 million.
The company said third-quarter revenue clocked in at $1.396 billion, a figure that's down 22 percent from a year ago, but 18 percent ahead of where AMD stood last quarter -- another needed sign of relief for the embattled chipmaker.
Those results all point to good news for what's now known as the AMD Product Company -- which excludes that portion of AMD's business now being operated under the GlobalFoundries banner. Early this year, AMD spun off its manufacturing business as GlobalFoundries, which it maintains as a joint venture in partnership with the Abu Dhabi-based Advanced Technology Investment Company (ATIC).
Because of the arrangement, AMD still continue to see an impact from its position in GlobalFoundries. The unit posted a loss of $191 million, or $0.28 per share, a decline from the $177 million ($0.27 per share) loss it saw last quarter.
While those hefty losses swung AMD as a whole to a loss, for the company's core chip-design business, things are looking up. The quarter delivered several key milestones, including an upswing in sales of 45-nanometer chips.
For one thing, PC OEMs including HP, Acer, Toshiba and Asus announced more than 70 new notebook models would ship using AMD's latest mobile offerings, the chipmaker said. And in the server realm, AMD began shipments of new server offerings.
"Strong demand for our product and platform offerings combined with disciplined execution resulted in AMD Product Company achieving profitability in the third quarter," said Dirk Meyer, AMD's president and CEO. "Growth in microprocessor and graphics unit shipments drove an 18 percent sequential revenue increase, while improved factory utilization rates, higher microprocessor average selling price and an increase in 45nm product shipments resulted in a gross margin improvement from the prior quarter."
AMD said it expects its Product Company revenue to continue growing, with fourth quarter yielding a "modest" increase.