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AMD Revenue Up 16%

Stronger than expected sales driven by demand for notebook and graphics processors.

Advanced Micro Devices has reported that its losses narrowed in the third quarter and revenue rose 16%, as the chipmaker reported higher sales of laptop and graphics processors.

AMD said Thursday that revenue for the quarter ended Sept. 25 increased to $1.62 billion from $1.4 billion the same period a year ago. The company's net loss shrunk to $118 million, or 17 cents a share, from $128 million, or 18 cents a share, a year ago.

AMD's losses were tied mostly to its remaining stake in the factory business it spun off last year into a separate company called GlobalFoundries. The other stakeholder is Advanced Technology Investment Co., which was formed by the Abu Dhabi government.

Excluding the factory charges and one-time items, AMD would have reported a profit of $108 million, or 15 cents a share. Those results beat analyst estimates of 6 cents a share on revenue of $1.61 billion, according to Thomson Reuters.

AMD last month lowered its third-quarter revenue forecast, because of lower-than-expected sales of processors for consumer laptops. The company said revenue would fall from 1% to 4% lower than its previous forecast of $1.65 billion.

On Thursday, the company said overall shipments of computer chips, which would include processors for consumer and business computers, were up 13% year over year, primarily driven by an increase in notebook microprocessor units. On the graphics chip side of its business, AMD reported that shipments rose 33% year over year.

In a conference call with financial analysts, Dirk Meyer, AMD president and chief executive, said the company planned to focus on improving its share of the laptop market, which stood at 13% or 14%, rather than start producing products for the emerging tablet computer market. Tablets have drawn a lot of attention, because of the success of the Apple iPad. Meyer said he preferred to let the tablet market grow before jumping in.

In giving his perspective on tablets, Meyer said he believed they have caused "a disruption in the notebook market" over the last quarter or two. Besides causing a slowdown in netbook sales, Meyer also believed the iPad may have taken some sales away from mainstream laptops.

Meyer also gave his perspective on Sandy Bridge, Intel's next-generation microarchitecture set to go into production in the first quarter of next year. Intel expects Sandy Bridge to be a big hit with computer makers, because it merges graphics and x86 cores on a single die and delivers graphics capabilities similar to what are delivered in separate, low-end graphics cards today.

Meyer said it's possible Sandy Bridge could eventually hurt sales of low-end discrete graphics cards, but he didn't expect that to happen next year. Overall, he expected the impact on the graphics business to be small, given the rising demand for more powerful graphics in computers. "OEMs (original equipment manufacturers) are still interested in having a discrete graphics step-up to sell in their SKUs (stock-keeping units)," he said.

In its fourth-quarter forecast, AMD expected revenue to be about flat with the third quarter.

AMD released earnings a couple of days after rival Intel reported that profits soared 59% year over year in the third quarter to $3 billion on record revenue of $11.1 billion. Intel said increased spending by businesses drove sales and profits. Sales of chips for consumer PCs were weaker than expected.

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