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AMD posts loss of $396 million

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Times Staff Writer

Advanced Micro Devices Inc., the second-largest chip maker, reported a $396-million loss Thursday, its fourth consecutive quarterly loss as it struggles to control costs and compete with archrival Intel Corp.

AMD, based in Sunnyvale, Calif., said the loss amounted to 71 cents a share. For last year’s third quarter, the company earned $136 million, or 27 cents. Third-quarter sales rose 23% to $1.6 billion from $1.3 billion last year.

AMD executives were optimistic that the chip maker was improving its financial picture.

“Our goal is to break even, and we have a shot at it” this quarter, said Robert Rivet, AMD’s chief financial officer. “Everything needs to work. It’s not just one business that drives the business.”

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Executives pointed out to analysts in a conference call that the company lost less money in the third quarter than it did in the previous three months, when it dropped $600 million. They also noted that the gross profit margin improved to 41% from 33% in the previous quarter.

Rivet said the company would not cut costs to achieve profitability, though it trimmed about 200 positions from its workforce of 16,500 in the last quarter.

Like Intel, which reported a 43% jump in quarterly earnings Tuesday, AMD said it was seeing unusually strong demand for microprocessors, particularly for notebook computers. Units of mobile processors, mostly for notebooks, jumped 68% from the previous year.

More than two years ago, AMD began a campaign to challenge Intel’s dominance. But after capturing market share and waking up the chip giant, AMD has struggled in the last year with inventory problems and delays in product launches.

AMD is launching new products, such as chips to handle graphics. In the last quarter, the company began to ship its Opteron brand chip for the lucrative server market.

“AMD has traditionally lost money at the bottom of its product cycle,” said David Wu, an analyst with Global Crown Capital, a financial services firm in San Francisco. “They are just introducing new products, and next year we should see some black ink.”

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Analysts and the company didn’t see eye to eye on whether AMD beat Wall Street profit projections. AMD does not report figures that exclude all one-time charges, a common measurement used by Wall Street to gauge a company’s profitability.

Separate surveys of analysts put AMD’s expected quarterly loss at 61 cents or 62 cents a share, well below the reported loss.

But AMD said many analysts had excluded from their estimates the $120 million in costs from the company’s purchase of graphics chip maker ATI Technologies Inc. and from severance and other one-time charges.

Those costs amounted to 22 cents a share, AMD said, and excluding them would put the loss at 49 cents a share, much less than what analysts expected.

AMD shares gained 46 cents to close at $14.57.

michelle.quinn@latimes.com

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