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AMD Posts Q4 Profit as Sales Jump

By Reuters
Published | Updated

SAN FRANCISCO – Advanced Micro Devices Inc. (AMD) on Wednesday posted a quarterly profit that reversed a year-ago loss as the No. 2 maker of computer processors grabbed more market share from giant rival Intel Corp. (INTC).

AMD said net profit for the fourth quarter was $95.6 million, or 21 cents per share, compared with a loss of $30 million, or 13 cents a year earlier. Revenue jumped 45 percent from a year earlier, to $1.84 billion.

Analysts had expected the company to earn 27 cents a share on revenue of $1.65 billion, according to Reuters Estimates.

Excluding a non-cash charge of $110 million associated with December's initial public offering of Spansion (SPSN), AMD's flash memory venture with Fujitsu Ltd., AMD said it would have earned 45 cents a share.

AMD has been steadily making headway against Intel, which on Tuesday reported quarterly profit and revenue that disappointed investors and drove its stock down more than 11 percent. AMD's shares, meanwhile, rose nearly 4 percent, and have more than doubled in the past year.

"AMD's growth rate increased in the fourth quarter resulting in continued market share gains across server, desktop and mobile product lines," AMD Chief Financial Officer Robert Rivet said in a statement.

AMD is richly valued, with the stock trading at more than 35 times expected 2006 profit, compared with less than 16 for Intel.

Although AMD's revenue is one-sixth that of Intel's, many analysts say its microprocessors boast some performance and power usage advantages over Intel's.

After initial success getting more of its chips into server computers that run corporate networks, AMD began making headway in laptop computers. Intel's results made clear AMD has now extended that to desktop PCs as well.

On Tuesday, Intel said it reckoned it had lost a point of market share to AMD, with most of that coming in desktops.

Despite the success, there are some doubts as to whether AMD can continue making inroads against Intel, which is rolling out a new slate of more powerful chips this year.

Merrill Lynch analyst Joe Osha downgraded AMD to "sell" on Tuesday, saying he expected Intel to reverse some of AMD's gains in 2006.

AMD stock, which closed at $34.15, up $1.29 or 3.9 percent, on the New York Stock Exchange, was halted in after hours trade.