AMD in the Black Again as Sales Jump

Chip maker Advanced Micro Devices Inc. posted its third consecutive quarterly profit Wednesday, driven by strong sales of computer microprocessors and flash memory chips used mainly in cellular phones.

For the three months ended June 27, AMD earned $32.2 million, or 9 cents a share, contrasted with a loss of $140 million, or 40 cents, a year earlier. Sales nearly doubled to $1.26 billion from $645 million.

Analysts were expecting the company to earn 9 cents a share on sales of $1.2 billion in the fiscal second quarter, according to a survey by Thomson First Call.

“The second quarter continued a very important trend for AMD, delivering on our promise of sustained profitability,” AMD Chief Executive Hector Ruiz said.

AMD’s report comes a day after its much larger rival Intel Corp. posted strong results that were overshadowed by an inventory buildup and a forecast of lower profit margins.

Intel blamed the higher inventory on greater-than-anticipated efficiency in its latest chip-making process, not on weakening demand. Still, investors pummeled Intel stock Wednesday -- it dropped $2.76, or more than 10%, to $23.38 in Nasdaq trading.

In its financial report, AMD said third-quarter sales were expected to “increase moderately.” It did not provide more specific guidance. AMD incurred massive losses during the economic downturn and returned to profitability last year.

Like Intel, AMD highlighted strong gains in flash memory revenue. AMD’s memory business posted record second-quarter sales of $673 million, up 220% from a year earlier. The division generated $45 million in operating profit.

Sales in AMD’s microprocessor business, which includes the Athlon and Opteron brands, improved 36% to $554 million. Operating profit was $58 million.

AMD said demand for it 64-bit processors “accelerated significantly” in the second quarter. The processors can handle more memory than today’s 32-bit counterparts but can run the same programs.

A year after launching its AMD64 chips, AMD soon will be facing competition from Intel, which has unveiled workstation processors that have the same capability to run 32-bit and 64-bit programs.

AMD’s results were announced after the end of regular trading. Earlier, shares of AMD fell 76 cents to $13.74 on the New York Stock Exchange. In the extended session, they dropped as low as $13.53 before recovering to $13.65.