The chip maker reported a net loss of $128 million, or 18 cents a share, compared to $134 million, or 22 cents a share, the same period last year.
Nevertheless, AMD beat Wall Street estimates. Analysts polled by Thomson Financial expected revenues of $1.26 billion and a loss of 42 cents a share.
AMD attributed the higher-than-expected results to "strong demand" for its microprocessors and graphics chips that power PCs. "Growth in microprocessor and graphics unit shipments drove an 18% sequential (from the second quarter) revenue increase, while improved factory utilization rates, higher microprocessor average selling price and an increase in 45nm (nanometer) product shipments resulted in a gross margin improvement from the prior quarter," Dirk Meyer, AMD president and chief executive, said in a statement.
Compared to the second quarter, gross margin rose to 42% from 37%.
AMD rival Intel also beat analyst estimates in the third quarter, another indication of a strengthening PC market. Intel this week reported that net income fell 8% to $1.9 billion, or 33 cents a share, on revenues of $9.4 billion. Wall Street had expected income of 28 cents a share on revenue of $9 billion.
AMD's and Intel's results backed findings from analyst firms Gartner and IDC, which reported Wednesday that global PC shipments in the third quarter grew 0.5% and 2% year-on-year, respectively. It was the first year-on-year quarterly increase this year.
AMD did not make a specific forecast for the fourth quarter, saying only that it expected revenue to be "up modestly."
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