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AMD posts first quarter profit after flash spinoff

Advanced Micro Devices Inc on Wednesday said it swung to a first-quarter profit as Intel Corp's biggest rival for microprocessors benefited from market-share gains and the spinoff of its unprofitable flash memory subsidiary.

The Santa Clara-based company posted net income of US$185 million, or US$0.38 a share, for the quarter ended March 26, compared to a net loss of US$17.4 million, or US$0.04 a share, in the same period last year. AMD's profit easily exceeded analysts consensus estimates of US$0.30 a share.

First-quarter sales grew 8.6 percent to US$1.33 billion from US$1.23 billion.

The company's shares fell in extended trading after it said revenue for the current quarter would be "flat to slightly down" from the first quarter. That was slightly lower than the US$1.35 billion analysts were expecting in a Thomson Financial survey.

The first-quarter results were the first time AMD hasn't counted sales of memory products, which are now part of a separate business called Spansion Inc, which sold shares to the public in December. Excluding sales of those products in the first quarter of last year, revenue would have been US$780 million.

AMD over the past year has been stealing market share from Intel, as it benefits from chips that outperform its much bigger rival and from cheaper manufacturing costs. AMD, which last week said it has begun shipping microprocessors from a new factory in Germany, is also getting a boost from increased productivity. It said the new facility is producing ``mature yields''

The higher volume AMD is seeing, combined with the high output and refurbished factories is driving down the company's costs. Gross margin, or the percentage of sales left after paying manufacturing costs, widened to 58.5 percent in the first quarter.
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