AMD reports unexpected profit
Strong sales of new microprocessor spurred profits in the
third quarter; AMD could beat Intel in some markets

SUNNYVALE, Calif., Oct. 6 — Advanced Micro
Devices Inc, a maker of Intel-compatible
microprocessors, reported an unexpected profit
in its third quarter, buoyed by strong sales of its
latest version of its K6 processor.

AMD REPORTED a narrow profit for the third
quarter of $1 million, or 1 cent a share, on revenues of
$685.9 million, compared with a loss of $31.7 million,
or 22 cents a share, on revenues of $596.6 million in the
year-ago quarter. Wall Street had been expecting a loss
of about 11 cents a share, according to First Call, which
tracks analysts’ estimates.
AMD said shipments of its AMD-K6 processors
jumped by more than one million units to 3.8 million
and AMD-K6 family processor sales increased 70
percent over the immediate-prior quarter.
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“Excellent manufacturing and sales execution
enabled AMD to return to profitability one quarter
ahead of expectations,” said W.J. Sanders III, chairman
and CEO, in a statement. “We are extremely pleased by
the strong demand in the retail channel for personal
computers powered by AMD-K6-2 processors.”
In a conference call with analysts following release
of the earnings report, Sanders said the K-6
microprocessor is comparable to Intel’s Pentium II
processor and that it’s a lot cheaper, reported CNBC
technology correspondent Renay San Miguel.
AMD officials raised another key point on the call.
According to preliminary results from market research
firm PC Data, for the first the first 3 weeks of
September through Sept. 19, AMD market share in the
sub-$1,000 segment exceeded 60 percent. In the overall
retail market for that period AMD had a 48 percent
market share versus Intel’s 43 percent share of the
market. If that momentum is maintained it will be the
first period that AMD has ever outsold Intel. If AMD
beats its rival, “that has promotional material all over
it,” said San Miguel.

AMD said that PCs powered by AMD-K6 family
processors captured 31 percent of the total U.S. retail
market for desktop systems in August, the latest period
for which data are available, according to PC Data. In
the rapidly growing market for sub-$1,000 systems, PCs
powered by AMD-K6 chips captured a 54 percent
market share — its highest retail market share yet.
For the first nine months of 1998, the company
reported total sales of $1.7 billion and a net loss of
$126.3 million, or 88 cents per share. For the first nine
months of 1997, AMD reported total sales of $1.7
billion and a net loss of $8.7 million, or six cents per
share.

Reuters and CNBC Technology Correspondent
Renay San Miguel contributed to this report.

http://www.msnbc.com/news/202608.asp