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Advanced Micro Devices reported that its third-quarter loss wasn’t as bad as expected and revenue was also unexpectedly high. It will be interesting to see if, after a couple of years of struggle, the perennial underdog to Intel might be on the recovery path.
The Sunnyvale, Calif.-based microprocessor maker said revenues were $1.78 billion, up 14 percent from a year ago. The net loss was $67 million, or 11 cents a share, compared to a loss of $396 million, or 71 cents a share, a year earlier. Analysts had expected a third quarter loss of 40 cents on revenue of $1.48 billion, according to a poll taken by Thomson Reuters.
Of course, it’s not exactly a great cause of celebration, since AMD has lost money for eight quarters in a row, mainly because Intel has become much more competitive with its chip designs.
Part of the reason for the recovery was AMD’s resurgence in graphics chips. A new graphics chip, the ATI Radeon HD 4800 series, launched in the summer helped AMD make a comeback against Nvidia, which has started to founder. Robert Rivet, chief financial officer, said in a conference call that adoption of quad-core processors was also strong.
The company had $191 million in technology license revenue in the quarter. The gross margin was 51 percent, or 45 percent not counting the license revenue. A year ago, gross margins were 41 percent.
Earlier this month, AMD said it would divide itself in two. AMD will design chips, while The Foundry Company will make them. It will do so with a multibillion-dollar infusion from Abu Dhabi’s government that will help it keep pace with Intel and pay off a big debt. The combined companies will make big investments in chip factories in New York and Dresden, Germany.
In the fourth quarter, AMD expects revenues to be flat with the third quarter. It continues to cut costs and sold off its digital TV chip business to Broadcom. Intel’s best hope was for AMD to continue to bump along the bottom in a weak financial state. But now it looks like AMD will be in fighting shape soon.
Update: JoAnne Feeney, an analyst at FTN Midwest Securities, said in a note Friday morning that AMD is taking market share in the notebook computer category (not counting the new netbooks). It also saw a 55 percent quarter to quarter increase in graphics shipments and is thus taking share from Nvidia. She expects that AMD will become profitable next year.
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