Advanced Micro Devices posted a third-quarter loss of $128 million, lower than Wall Street projections, while also reporting revenue that beat expectations.
The loss, at 18 cents a share, compares with a loss of $134 million, or 22 cents a share, for the same period last year. Analysts had expected a loss of 42 cents a share.
Revenue was $1.4 billion, an 18 percent increase over the second quarter of this year, while falling 22 percent compared to the third quarter of 2008. Forecasts had called for only $1.3 billion in revenue.
"There was strength in notebooks and China," said Dirk Meyer, AMD president and CEO, speaking during the company's earnings conference call on Thursday afternoon. He added that there is "an increased focus on small form factor" laptops at AMD and that upcoming inexpensive, thin laptops based on AMD processors should be priced lower than Intel-based offerings. And Meyer said AMD will broaden its processor offerings in this area going into the holiday season.
Meyer also spoke to AMD's future 32-nanometer silicon. Products codenamed "Fusion" that combine the graphics function with the main processor will be based on 32-nanometer technology and ship in the second half of 2010, Meyer said.
AMD is currently moving most of its production to 45-nanometer-based processors. Intel, on the other hand, will begin to move to 32-nanometer by the end of this year. Generally, the small the geometry, the faster and more power-efficient the chip is.
Addressing graphics processing units (GPUs), Meyer said that its recently-introduced 5800 series products have been well received but that the average selling prices of GPUs were down compared to the prior quarter and are still below central processing units or CPUs, which are higher.
"Growth in microprocessor and graphics unit shipments drove an 18 percent sequential revenue increase, while improved factory utilization rates, higher microprocessor average selling price, and an increase in 45 (nanometer) product shipments resulted in a gross margin improvement from the prior quarter," Meyer said in a statement.
AMD expects its product company (non-manufacturing-related) revenue to be up modestly for the fourth quarter of 2009.
AMD was the world's second-largest seller of microprocessors in the second quarter of 2009 with an 11.9 percent share of global revenue behind market-leader Intel, according to market researcher iSuppli.
Updated at 3:30 p.m. PDT: adding comments from earnings conference call.
Updated at 3:10 p.m. PDT: adding comments from CEO Paul Otellini and CFO Stacy Smith.
Intel's third-quarter revenue jumped $1.4 billion over the second quarter, though year-to-year revenue and profit comparisons were down.
The world's largest chipmaker is struggling to lead the PC industry out of a brutal downturn that saw demand collapse earlier in the year.
Revenue came in at $9.4 billion, beating Wall Street expectations, which hovered at just more than $9 billion. Revenue, however, was down from the $10.2 billion reported in the year-earlier period.
On a year over year basis, revenue for the third quarter was down 8 percent, Intel said in a statement, adding that this was an improvement over the 15 percent and 26 percent year over year declines in the second and first quarters respectively.
Intel shares were up more than 5 percent after hours, trading as high as $21.45 form a regular closing price of $20.49.
"Overall (corporate) enterprise remains weak," said CEO Paul Otellini in the company's earnings conference call.
Profits were $1.9 billion, or 33 cents per share, down from the third quarter of last year, when Intel posted a profit of $2.0 billion, or 35 cents a share. But the 33 cents beat analyst forecasts, which were 28 cents per share.
The chipmaker's gross margin for the quarter, a crucial earnings indicator, was 57.6 percent, higher than the company was projecting.
Looking ahead, Intel expects revenue to hit $10.1 billion, "plus or minus $400 million," in the fourth quarter, and gross margin to improve to 62 percent, plus or minus 3 percentage points.
Intel also said the average selling price for microprocessors was slightly down sequentially.
Inventories were also down $315 million sequentially. Intel chief financial officer Stacy Smith said inventories were a little lower than Intel would like and that Intel intends to increase inventories in the fourth quarter.
The economy may be under water, but the graphics chip market is on fire.
The market for graphics processing units (GPUs) saw the biggest increase in third-quarter shipments in six years, according to Jon Peddie Research (JPR), as AMD gained in both the desktop and laptop segments.
Laptop graphics chip shipments soared by almost 40 percent quarter-to-quarter, as AMD gained
(Credit: Jon Peddie Research)In the third quarter of 2008, more than 111 million GPUs were shipped, the market researcher said. During the same quarter last year, 91 million GPUs shipped, and 94 million units shipped in the previous quarter. That's an annual increase of 22.5 percent and a quarter-to-quarter increase of almost 18 percent, according to JPR.
In the overall market, Intel jumped from 33.4 percent in the third quarter of 2007 to 49.4 percent in the third quarter of this year, according to JPR. AMD saw year-to-year growth of 22.8 percent, while Nvidia lost 6.4 percent year-to-year.
For desktop GPUs, Intel increased its first place position to a 43.9 percent share, while Nvidia's position slipped to 32.6 percent, and AMD climbed to 20.3 percent, JPR said. Desktop GPUs saw an increase of 4.7 percent this quarter to 61.9 million units.
On the laptop front, Intel GPU shipments dropped one point to 56.2 percent, while Nvidia GPU shipments declined to 21.8 percent, and AMD jumped to 20.9 percent. Laptop graphics chips soared almost by 40 percent quarter-to-quarter to 49.4 million units, to claim 44.4 percent of the market, JPR reported.
Though the third quarter is typically up as PC makers place orders for chips for the holiday season, "this quarter was up more than any other for some time, and in spite of suggestions of a recession that started last Q4," said Jon Peddie, president of the Tiburon, Calif.-based firm.
Peddie cautions, however, that the doom-and-gloom scenarios may be having their effect on business and consumer spending plans and the fourth quarter could be flat (compared with the third quarter) this year.
Nvidia has become a Silicon Valley hot spot for rumors. One is tied to an analyst downgrade Monday, the other to the rumored Apple MacBook refresh.
An analyst rekindled speculation Monday that the world's largest graphics chip supplier would sell off its chipset business, while rumors persist that the company would play a larger role in an expected refresh of the Apple MacBook.
Nvidia graphic on its notebook home page
(Credit: Nvidia)Nvidia shares fell Monday after a Pacific Crest analyst issued a negative report on the company's prospects. In the report, the analyst said "our checks confirm" that Nvidia will exit the chipset business next year.
Nvidia chipsets--sometimes referred to as MCPs--serve as supporting silicon for the company's graphics processors. In the past, Nvidia has denied that it will exit the chipset business.
The analyst also speculated that Nvidia will pre-announce negative results for the third quarter (ended October). Nvidia has been dogged by negative press and analyst reports after it disclosed issues with its processors and chipsets back in July.
If that wasn't enough, Pacific Crest said Nvidia may see share loss in the notebook market next year as a result of a future refresh of "Montevina" graphics silicon from Intel.
But not all is lost. On the upside, rumors persist that Nvidia will play a large role in an expected MacBook refresh this month. The latest rumor holds that Nvidia is showing off prototypes internally of upcoming MacBooks with new Nvidia silicon.
Some are even pointing to a graphic on the Nvidia notebook home page of a slim notebook design as a possible MacBook design--though a more plausible explanation is that it's simply generic artwork.
Apple uses Nvidia graphics chips in its high-end MacBook Pros, but the MacBook and MacBook Air use Intel integrated graphics silicon. One of the latter two could be recipients of new Nvidia graphics chips.
Nvidia would not comment on the rumors.
Despite an economic crisis and volatile stock market, Intel copped an upgrade Tuesday.
Shares of the world's largest chipmaker rose 1.46 points, or 8.45 percent, Tuesday to $18.73.
At least some of this uptick can be attributed to investment bank Piper Jaffray, which raised its rating on Intel to "buy" from "neutral" on Tuesday. Piper Jaffray analyst Auguste Richard said in a research note reported widely on Tuesday that Intel should make its third-quarter earnings numbers and that checks show that Intel is running its factories nearly flat out, which should favorably impact gross margin, a key indicator of profitability.
In the third quarter, Intel's gross margins may come close to the midpoint of the gross margin range, on a profit of 35 cents and sales of $10.2 billion, according to Richard. In July, Intel forecast sales of $10 billion to $10.6 billion for the third quarter.
Intel will report third-quarter earnings on October 14.
On another front, Intel Chairman Craig Barrett said the chipmaker will continue to invest aggressively in products and technologies despite the U.S. financial meltdown's potentially negative impact on emerging markets that are needed for its growth, according to a Reuters report.
In 2007, Intel spent $5.8 billion on research and development and $5 billion on plant and equipment.
New products may help Intel's bottom line. Intel is getting set to ship a brand new chip architecture in the fourth quarter. The "Nehalem" line of processors will appear initially as the Core i7 line of desktop silicon.
Intel will follow the desktop chips with Nehalem server products in the first quarter of next year.
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