AMD posted its first quarterly net profit in more than two years, blowing past Wall Street expectations, driven by strong shipments of products used in personal computers.
AMD reported fourth-quarter net income of $ 43.1 million, or 12 cents a share on a 76-percent rise in sales, compared with a loss of $ 854.7 million, or $ 2.49 a share. The year-ago loss included $ 330 million restructuring charge. AMD forecast a sequential revenue decline in keeping with traditionally slow first quarter sales, echoing comments made last week by larger rival Intel. Wall Street analysts cheered the results, saying the company delivered on promises that it could significantly boost revenue — with products like its AMD 64-bit processors — on top of an 88-percent sales jump it posted in the third quarter. Sales increased in all of its regions, including record demand in China and Latin America. Sales were also solid for its Athlon XP desktop processor line as well as Flash memory sales.

AMD posted its first quarterly net profit in more than two
years, blowing past Wall Street expectations, driven by strong shipments of
products used in personal computers.
AMD reported fourth-quarter net income of $ 43.1 million, or 12 cents a share on
a 76-percent rise in sales, compared with a loss of $ 854.7 million, or $ 2.49 a
share. The year-ago loss included $ 330 million restructuring charge. AMD
forecast a sequential revenue decline in keeping with traditionally slow first
quarter sales, echoing comments made last week by larger rival Intel. AMD shares
eased in after-hours trade after rising almost 4 percent in the regular session.

The microprocessor maker is positioned to break even or possibly deliver a
profit in the current quarter, AMD chief executive Hector Ruiz said on a
conference call to discuss earnings. "We do not plan to lose money in the first
quarter," he said.

Wall Street analysts cheered the results, saying the company
delivered on promises that it could significantly boost revenue — with products
like its AMD 64-bit processors — on top of an 88-percent sales jump it posted
in the third quarter.

"It was a good quarter and marks continued improvement," said analyst Eric
Gomberg, of Thomas Weisel Partners. "But the question is, how much can (AMD)
improve its margins as it grows revenue."

On the conference call with analysts, the company said its expects "margin
expansion" in future periods, driven by cost reduction.

AMD joins a chorus of technology bellwethers, such as Intel, Apple Computer Inc.
(NasdaqNM:AAPL – News) and International Business Machines Corp. (NYSE:IBM –
News), that have reported strong results for their most recent quarters,
reinforcing the view that a tech sector recovery is underway.

Moreover, there is renewed optimism in the chip industry as the market heads out
of its worst downturn ever. Chip sales plunged by a third in 2001 as corporate
sales slowed, dot-coms went bust and the overall economy slumped.

The results include a gain of 3 cents a shares on extraordinary items, including
an adjustment to previously recorded restructuring charges, the company said.

AMD sales rose to $ 1.21 billion from $ 686.4 million a year ago. The final
quarter of the year is typically a strong selling season, boosted by demand for
electronic devices including cellular phones, for which AMD makes key
components.

The Sunnyvale, California, company said sales increased in all of its regions,
including record demand in China and Latin America. Sales were also solid for
its Athlon XP desktop processor line as well as Flash memory sales.

Analysts had on average forecast AMD would post a net profit of 4 cents a share,
on revenue of $ 1.08 billion, according to Reuters Research, a unit of Reuters
Group Plc.

Looking ahead to the first quarter, AMD said seasonal patterns are expected to
"prevail," with aggregate sales seen down slightly.

"The fourth quarter (is a) very strong seasonal consumer market in wireless
handsets … and it is the expectation of the Street as a whole that the first
quarter will experience downward movement," said Ruiz. "Nothing out of the
ordinary."

Shares of AMD slipped to $ 17.15 in after-hours trade, after closing at $ 17.38,
up about 3.7 percent on the New York Stock Exchange.