AMD Posts Financial Loss but Sees PC Demand Increasing

Advanced Micro Devices posted a financial loss in the third quarter, but the company’s executives said they believe that the chip maker is poised for a turnaround in the coming months.

During an Oct. 15 conference call to discuss AMD’s third-quarter results, CEO Dirk Meyer offered a positive outlook for the rest of 2009 despite the current loss. Meyer said he expected consumers to start buying PCs again in the fourth quarter and that businesses could begin refreshing their hardware–PCs and servers–in 2010.

“We are seeing continued recovery in both Europe and North America,” Meyer said. “It also appears that the commercial IT market is positioned to improve next year.”

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In addition, Meyer said AMD has been able to cut costs. The company is also controlling its expenses by shifting its processors to newer, 45-nanometer manufacturing, which allows the company to produce the chips at a much lower cost.

For the financial third quarter of 2009, which ended on Sept. 26, AMD reported a net loss of $128 million or 18 cents per share. During the third quarter, AMD collected $1.39 billion in revenue. Those numbers beat Wall Street expectations. Financial analysts had predicted a net loss of 42 cents per share for AMD, with revenue of $1.26 billion.

The numbers were also better than for the third quarter of 2008, when AMD posted a loss of $134 million or 22 cents per share. The latest numbers are also an improvement over the second quarter, when AMD posted a net loss of $330 million or 49 cents a share, with revenue of $1.18 billion.

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AMD, which is the world’s second-largest producer of x86 processors for PCs and servers, posted its numbers just a few days after rival chip maker Intel reported its own third-quarter results. During the quarter, Intel earned almost $1.9 billion in profit on $9.39 billion in revenue, down from $10.2 billion in the third quarter of 2008. Still, Intel’s positive numbers seemed to show that consumers and businesses were buying more hardware, specifically PCs.

Earlier the week of Oct. 12, Gartner and IDC reported that global PC shipments were better than expected in the third quarter of 2009.

In the coming months, AMD is expected to release a number of new laptop platforms geared toward the consumer market, allowing the company to take advantage of the 2009 holiday shopping season.

The “Tigris” platform, which the company originally planned to release in the third quarter, targets the mainstream notebook market. In addition, AMD plans to release “Congo,” a platform design for what the company calls “thin and light” laptops and a follow-up to the “Yukon” platform it introduced at the beginning of 2009.

On the graphics side, Meyer said the company expected good results from the introduction of its ATI Radeon HD 5000 series of graphics processors, which support Microsoft’s Directx11 technology that is used with Windows 7.

In addition to looking to attract consumer spending during the traditional holiday season, Meyer and his executives are preparing for what they hope will be a corporate IT refresh cycle in 2010. For that, AMD is betting on its Opteron processors, including its newer six-core chips, as well as its microprocessors for PCs.

“We are well-positioned relative to the extent that [the] commercial IT sector regains strength,” Meyer said. “That is going to help us.”