AMD Beats 2Q Earnings Expectations On New Chip Sales

SAN JOSE (CBS/AP) – A new chip from Advanced Micro Devices Inc. combining general-purpose and graphics capabilities showed early signs of success as the company’s earnings for the latest quarter were slightly better than what Wall Street had expected.

AMD, the No. 2 maker of computer microprocessors, sold more than 7 million of the “accelerated processing units” in the second quarter, more than half the total since they went on sale in November. The chips represent the kind of creative risks that allow AMD to remain a technological trendsetter despite its perpetual underdog status against Intel Corp.

Shares rose 27 cents, or 4.2 percent, to $6.67 in extended trading Thursday after the results came out.

Nonetheless, AMD has long been a distant second to Intel and now is even further behind in the transition to smartphones and tablet computers. AMD’s chips are primarily used in traditional desktop and laptop computers. AMD has been without a permanent CEO since January, when Dirk Meyer was forced out over the board’s unhappiness with AMD’s growth rate and its strategy for mobile.

AMD earned $61 million, or 8 cents per share, compared with a loss of $43 million, or 6 cents per share, a year ago. Adjusted net income was 9 cents per share, a penny better than the average estimate of analysts polled by FactSet.

Revenue fell slightly short at $1.57 billion. Analysts expected $1.58 billion, according to FactSet.

AMD’s third-quarter forecast calls for a sequential increase in revenue of 8 percent to 12 percent. That translates to $1.70 billion to $1.76 billion, in line with analyst forecasts for $1.71 billion.

But AMD is operating in an industry in upheaval.

Revenue in its microprocessor division was flat. The division was hurt by lower revenue from server chips, suggesting losses in market share to Intel. Intel’s revenue from server chips was up in the latest quarter.

And AMD’s revenue in its graphics chip division fell 17 percent from last year.

The PC industry is flagging as U.S. and European sales remain weak and tablet computers such as Apple’s iPad are making inroads.

Intel’s second-quarter results, reported Wednesday, were stronger than expected, but CEO Paul Otellini said that PC unit shipments should be up 8 percent to 10 percent this year, instead of the low double-digit growth he had earlier predicted. That reinforced doubts about the market’s health.

And on Thursday, Microsoft Corp. reported that revenue in the division that makes Windows operating system, which powers the bulk of traditional PCs, declined in the latest quarter. Microsoft said that revenue in that division would have grown were it not for the launch of Windows 7 a year ago, which made comparisons tougher this year.

And last week market research firms IDC and Gartner Inc. reported that worldwide PC shipments are growing slower than expected.

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