AMD Turns in Strong Q3
By Jessica Davis -- EDN, October 19, 2006
Advanced Micro Devices has reported a surge in net income and revenues for its Q3 and forecast a seasonally strong Q4.
Intel’s smaller rival showed strong growth once again with net sales of $1.33 billion for Q3 compared to $1.22 billion for the previous sequential quarter and $1.01 billion for the year-ago quarter representing a 32 percent increase year-over-year.
AMD’s net income also showed strong growth, rising to $134.56 million in Q3 compared to $88.85 million in the previous sequential quarter and $76.0 million for the year-ago quarter.
“Third quarter sales increased nine percent from the prior quarter, and 32 percent year-over-year, due to strong demand for all AMD processor brands,” said Robert J. Rivet, AMD’s CFO, in a statement.
“Microprocessor unit shipments grew 18 percent sequentially as customers continued leveraging AMD’s open platform approach. Demand for AMD Turion 64 mobile processors was especially strong, resulting in record mobile processor sales and unit shipments coupled with increased average selling prices (ASPs). Record AMD Opteron processor sales resulted from continued adoption of dual core processors, record unit shipments and improved ASPs.”
But a couple of analysts thought the going might get a little tougher for AMD in the quarters to come.
"Despite impressive unit gains, our fears of margin erosion did play out during the quarter, with gross margins down 540 bps quarter over quarter, as AMD reacted to Intel's July price cuts," said Chris Caso and Elizabeth Pate, analysts with FBR Research, in a report issued after AMD's earnings announcement. "We believe AMD still has a tough road going forward, as Intel ramps its new product lineup in the first half of 2007, and as Intel launches 45nm production in the second half of 2007, which is likely to create more margin pressure for AMD.
"Net, we think AMD's success in 2005/06 was due to AMD successfully exploiting the deficiencies in Intel's product lineup, despite AMD's manufacturing disadvantage," they said. "Now, Intel's product lineup is much improved, yet the manufacturing disadvantage still exists."
"Despite impressive unit gains, our fears of margin erosion did play out during the quarter, with gross margins down 540 bps quarter over quarter, as AMD reacted to Intel's July price cuts," said Chris Caso and Elizabeth Pate, analysts with FBR Research, in a report issued after AMD's earnings announcement. "We believe AMD still has a tough road going forward, as Intel ramps its new product lineup in the first half of 2007, and as Intel launches 45nm production in the second half of 2007, which is likely to create more margin pressure for AMD.
"Net, we think AMD's success in 2005/06 was due to AMD successfully exploiting the deficiencies in Intel's product lineup, despite AMD's manufacturing disadvantage," they said. "Now, Intel's product lineup is much improved, yet the manufacturing disadvantage still exists."
Intel reported its Q3 earnings earlier this week.
