AMD Shows Strong Gains In 4Q

The server business and dual-core microprocessors are driving growth.
Advanced Micro Devices Wednesday reported a strong fourth quarter and said it continues to pick up enterprise customers for its dual-core server processors.

"The server business continues to be an engine of growth," said AMD's Chairman, CEO and President Hector Ruiz. "Clearly we have gained significant share in the fourth quarter."

AMD, Sunnyvale, Calif., reported net income of $96 million, or 21 cents per share, for the quarter ended Dec. 25. The company posted a loss of $30 million, or 8 cents per share for the same period in 2004 . The fourth quarter number includes a non-cash charge of $110 million, or 24 cents per share, associated with a reduction in AMD's ownership in its Spansion flash memory business. That company completed an IPO in late December. Excluding the charge, AMD said its earnings per share were 45 cents a share. Analysts had expected 26 cents per share, according to Thomson/First Call.

Fourth quarter sales were $1.84 billion, up 45 percent from the fourth quarter in 2004. Those fourth quarter sales numbers do not include sales from AMD's Spansion memory business for the last five days of the fourth quarter.

Ruiz said AMD's strongest growth was in its server business, followed by its mobile and desktop offerings. Ruiz noted that the continued strength of the desktop business surprised company executives.

His comments, no doubt, were aimed at Intel's own troubles with desktop processors. The world's largest maker of CPUs said weak demand for desktop processors and lower average selling prices caused it to miss its estimates for the fourth quarter.

AMD expects first quarter sales to be flat to slightly down from the fourth quarter of 2005. If achieved, this would approach a 70 percent increase from comparable sales in the first quarter of 2004, according to AMD.

Though Intel's President and CEO Paul Otellini vowed to "recapture" market share in the second half of 2006, when the chip maker is expected to release low-power dual-core CPUs for servers and desktops, Ruiz said AMD expects to continue to gain market share during the year. He said he expects AMD to grow at twice the market rate in 2006.

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