News Article
PLAYING CATCH-UP
Strong growth in microprocessor sales contributed much improved results for AMD in the fourth quarter but the company still remains a long way behind its fierce rival Intel.
US microprocessor maker AMD has reported sales of $1.523 billion and net income of $76 million for the quarter ended September 25, 2005.
Third quarter sales were up 23 percent compared to the third quarter of 2004 and increased 21 percent from the second quarter of 2005. In the third quarter of 2004, AMD had sales of $1.239 billion and net income of $44 million. In the second quarter of 2005, AMD achieved sales of $1.260 billion and net income of $11 million. Operating income in the third quarter of 2005 was $79 million as compared to operating income of $68 million in the third quarter of 2004 and an operating loss of $7 million in the second quarter of 2005.
“This was another record-breaking quarter for AMDs microprocessor business,” said Robert J Rivet, AMDs chief financial officer. “Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth of 44 percent compared to the third quarter of 2004 and 26 percent compared to the second quarter of 2005. We established new quarterly records in unit and dollar sales, gross margin and operating income.”
However, the company's memory division suffered a setback, with sales falling four percent from the third quarter of 2004, although they were up 12 percent compared to the second quarter of 2005, driven by higher overall unit sales.
"Increased shipments of high-density MirrorBit Flash solutions to the largest wireless OEM customers and a more balanced supply and demand environment helped stabilise the average selling price during the quarter,” said Rivet.
The company's third quarter gross margin was 41 percent compared to 40 percent in the third quarter of 2004 and 39 percent in the second quarter of 2005. The increase was due to improved gross margins in the company's microprocessor and Flash memory businesses.
The company achieved record sales by its Computation Product Group (CPG) of $969 million, up 44 percent from $673 million in the third quarter of 2004 and a rise of 26 percent from $767 million in the second quarter of 2005.
CPG also generated record operating income of $209 million in the third quarter, up from $89 million in the third quarter of 2004 and $110 million in the second quarter of 2005. CPGs third quarter sales growth was driven by record server, mobile and desktop processor sales and a more than doubling of sales to large global OEM accounts compared to the third quarter of 2004. Record mobile processor sales were largely the result of a 72 percent increase quarter-on-quarter in AMD Turion 64 mobile processor sales. Geographically, sales were especially strong in high-growth markets including Russia, India and Greater China.
The company's Memory Products Group (MPG) sales of $516 million was down 4 percent from $538 million in the third quarter of 2004 and an increase of 12 percent from $462 million in the second quarter of 2005. MPG reduced its operating loss to $50 million, from an operating loss of $90 million in the second quarter of 2005. The revenue increase over the second quarter of 2005 was driven by record unit sales, increased purchases by the largest global wireless OEMs, and a richer product mix. MirrorBit Flash sales increased 35 percent from the second quarter of 2005 on improved unit volumes and ASPs.
Looking to the next quarter, AMD expects fourth quarter microprocessor sales to grow between seven and 13 percent compared to the third quarter of 2005, which is a 42 to 50 percent increase from the fourth quarter of 2004.
In spite of the companys much improved results in the third quarter and positive projections for the next quarter, AMD is still not living up to its potential. Although the companys microprocessors are widely regarded to be the best, its proportion of the PC microprocessor market is still only a fraction of its bitter rival Intels. The company has also been hit hard by a memory price war initiated by Intel. AMDs memory business is loss-making. Intels on the other hand is making good money.
Third quarter sales were up 23 percent compared to the third quarter of 2004 and increased 21 percent from the second quarter of 2005. In the third quarter of 2004, AMD had sales of $1.239 billion and net income of $44 million. In the second quarter of 2005, AMD achieved sales of $1.260 billion and net income of $11 million. Operating income in the third quarter of 2005 was $79 million as compared to operating income of $68 million in the third quarter of 2004 and an operating loss of $7 million in the second quarter of 2005.
“This was another record-breaking quarter for AMDs microprocessor business,” said Robert J Rivet, AMDs chief financial officer. “Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth of 44 percent compared to the third quarter of 2004 and 26 percent compared to the second quarter of 2005. We established new quarterly records in unit and dollar sales, gross margin and operating income.”
However, the company's memory division suffered a setback, with sales falling four percent from the third quarter of 2004, although they were up 12 percent compared to the second quarter of 2005, driven by higher overall unit sales.
"Increased shipments of high-density MirrorBit Flash solutions to the largest wireless OEM customers and a more balanced supply and demand environment helped stabilise the average selling price during the quarter,” said Rivet.
The company's third quarter gross margin was 41 percent compared to 40 percent in the third quarter of 2004 and 39 percent in the second quarter of 2005. The increase was due to improved gross margins in the company's microprocessor and Flash memory businesses.
The company achieved record sales by its Computation Product Group (CPG) of $969 million, up 44 percent from $673 million in the third quarter of 2004 and a rise of 26 percent from $767 million in the second quarter of 2005.
CPG also generated record operating income of $209 million in the third quarter, up from $89 million in the third quarter of 2004 and $110 million in the second quarter of 2005. CPGs third quarter sales growth was driven by record server, mobile and desktop processor sales and a more than doubling of sales to large global OEM accounts compared to the third quarter of 2004. Record mobile processor sales were largely the result of a 72 percent increase quarter-on-quarter in AMD Turion 64 mobile processor sales. Geographically, sales were especially strong in high-growth markets including Russia, India and Greater China.
The company's Memory Products Group (MPG) sales of $516 million was down 4 percent from $538 million in the third quarter of 2004 and an increase of 12 percent from $462 million in the second quarter of 2005. MPG reduced its operating loss to $50 million, from an operating loss of $90 million in the second quarter of 2005. The revenue increase over the second quarter of 2005 was driven by record unit sales, increased purchases by the largest global wireless OEMs, and a richer product mix. MirrorBit Flash sales increased 35 percent from the second quarter of 2005 on improved unit volumes and ASPs.
Looking to the next quarter, AMD expects fourth quarter microprocessor sales to grow between seven and 13 percent compared to the third quarter of 2005, which is a 42 to 50 percent increase from the fourth quarter of 2004.
In spite of the companys much improved results in the third quarter and positive projections for the next quarter, AMD is still not living up to its potential. Although the companys microprocessors are widely regarded to be the best, its proportion of the PC microprocessor market is still only a fraction of its bitter rival Intels. The company has also been hit hard by a memory price war initiated by Intel. AMDs memory business is loss-making. Intels on the other hand is making good money.
