AMD bucks trend with strong results

Advanced Micro Devices (AMD) has reported record earnings this quarter despite tougher than expected competition.

The chip maker's results buck a trend of profits warnings from chip and PC manufacturers which appeared to point to a slowdown in the PC market.

AMD said net income rose to $409m compared with a loss of $106m a year ago. Excluding charges, and the gains from the sale of its Legerity voice communications business, AMD reported operating profits of $219m.

Sales almost doubled to $1.21bn from $662m a year ago, buoyed by strong sales of PC processor and flash memory devices.

Demand for the latter, which are used in cellular phones and other devices, more than doubled compared to the same quarter last year, and AMD expects demand to exceed supply by the end of the year.

The company, whose Athlon and lower-end Duron processors are used extensively in PCs, said it expects to sell all the Athlon processors it can make and that it will exceed earlier sales projections.

For the year, AMD expects total sales of PC processors to easily exceed 25 million units, with the final tally projected to be approximately 28 million. This compares with last year's total of 18.8 million.

"In a tougher market than anticipated, AMD achieved record PC processor revenues on record unit sales, which were up more than 50 per cent year-on-year and 10 per cent sequentially," said Jerry Sanders, chairman and chief executive at the chip maker.

"We continued our excellent operational execution and met our aggressive goal of sequentially doubling combined Athlon and Duron processor sales to more than 3.6 million units," he added.

AMD's strong third-quarter results are in contrast to those of arch rival Intel, which has warned that its forthcoming results will be affected by disappointing sales in Europe. Apple and Dell have also recently issued profit warnings.

Thomas Reuner, an analyst at researcher Dataquest, said: "Intel has had internal problems, particularly with supply, and the commercial market has been hit by the continuing year 2000 lock-down effect as well as the slower than expected adoption of Windows 2000. AMD is going after the consumer space which doesn't have those problems."

In a separate development, AMD has for the first time publicly demonstrated a multiprocessor computer designed specifically to work with the company's own processors.

The demonstration, at the 2000 Microprocessor Forum in San Francisco, consisted of a computer powered by dual Athlon processors, the AMD-760 MP chipset and next-generation double data rate memory.