AMD shot right past analysts' expectations during the second quarter to post a profit and sparkling processor sales. Not bad for a company alleging that Intel has an illegal stranglehold on the processor market.
Opteron, Opteron, Opteron was the key message from management. Sales of AMD's server chip shot up 89 per cent year-over-year, helping push total revenue to $1.260bn. Strong server and mobile processor sales offset a drop in flash memory revenue. AMD posted net income of $11m - earning 3 cents per share - while analysts were looking for the company to post a loss of 5 cents per share. A year earlier, AMD reported net income of $32m and 9 cents earnings per share.
"Our microprocessor business delivered another record quarter driven by increased demand for AMD server and mobile processors from our largest global OEM customers," said Robert Rivet, AMD's CFO. "Once again we continued to gain momentum with microprocessor sales growth increasing 38 per cent compared to the second quarter of 2004."
Hard-nosed financial analysts couldn't compliment AMD enough during a conference call to go over the results. "Good execution, guys," said one. "Great gross margins there in processors," said another. "Congratulations on your server success in the quarter. You can add UBS to your list of customers," said an analyst from UBS.
True, AMD's processor business performed well, but the analysts seemed to take it pretty easy on the company. As mentioned, its net income fell year-over-year. In addition, total revenue fell slightly from the $1.261bn reported one year ago. AMD is currently looking to IPO its underperforming flash memory unit which weighed down the processor sales.
You may have heard that AMD recently lobbed an antitrust suit at Intel, alleging that unfair business practices have impacted AMD's ability to make the most of superior processor technology. AMD's Opteron processor outperforms Xeon on countless benchmarks and is a dual-core engine, while Xeon still has just one core. AMD's desktop and mobile products also compare favorably with those from Intel, depending on the metric.
One savvy analyst tossed AMD CEO Hector Ruiz a real softball, asking how much of the x86 dual-core server market the company currently owns.
"As far as dual-core processors, we have 100 per cent market share due to the failure of our competitor to execute," Ruiz said.
That's strong talk for a battered underdog.
AMD declined to provide much in the way of guidance for the third quarter, saying only that it expects chip sales to exceed typical, past totals for the period. ®
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