AMD Reports Third Quarter Results
- EPS of $0.27 Driven by 18 Percent Quarter-Over-Quarter Increase in Microprocessor Unit Shipments and Record Sales of Mobile Processors -
SUNNYVALE, Calif. --
AMD (NYSE: AMD) today reported sales of $1.33 billion, operating income of $119 million, and net income of $134 million, or $0.27 per share, for the quarter ended October 1, 2006. These results include $16.5 million of employee stock-based compensation expense.
In the third quarter of 2005, excluding the Memory Products segment1
, AMD reported sales of $1.01 billion and operating income of $129 million. In the second quarter of 2006, AMD reported sales of $1.22 billion and operating income of $102 million.
|| Q3-06 vs Q2-06
|| Q3-06 vs Q3-05
|Net Sales (billions)
|Operating Income (millions)
| Gross Margin
|| (5.4)% points
|| (4.0)% points
“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 chief financial officer. “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.”
Desktop processor sales were flat sequentially with increased unit shipments offset by decreased ASPs.
AMD continued to successfully ramp production in both Fab 36 and Chartered Semiconductor. The conversion to 65 nanometer production in Fab 36 is on track, with revenue shipments planned for the fourth quarter.
Third quarter gross margin was 51.4 percent, compared to 56.8 percent in the second quarter of 2006 and 55.4 percent in the third quarter of 2005. The gross margin decrease was largely due to lower desktop processor ASPs which caused a decline in overall processor ASPs.
- AMD and ATI announced plans to join forces to create a processing powerhouse. The transaction has received all of the required regulatory and shareholder approvals necessary for close and is expected to be completed the week of October 23rd.
- Customer highlights in the third quarter included:
- Dell launched its first AMD64 processor-based Dimension desktop systems for consumers and small businesses.
- Founder, China’s second largest PC provider and the seventh largest global desktop PC provider, announced plans to launch a full range of AMD64-based desktop, notebook and server systems throughout China.
- IBM unveiled five new AMD Opteron-based mainstream server platforms that are quad-core ready.
- Commercial adoption of AMD Athlon™ 64 processor-based desktop systems continued, with Acer, HP, Lenovo, and NEC Computers announcing new AMD-powered platforms. The HP and Lenovo solutions are their first AMD client systems targeted at large enterprise customers.
- More than 150 AMD Turion 64 platforms are shipping or in development worldwide from the leading PC manufacturers.
- AMD announced broad support for its Torrenza Initiative by leading server manufacturers including Cray, Dell, Fujitsu Siemens Computers, HP, IBM and Sun Microsystems. Torrenza is the industry’s first open x86 innovation platform, capitalizing on the unique advantages of the AMD’s Direct Connect Architecture and HyperTransport™ technology to enable partners to innovate within a common ecosystem.
- AMD introduced its next-generation AMD Opteron processor family, the only x86 server processor with planned upgradeability to native quad-core within the same thermal design power envelope.
- More than 60 percent of the top 500 of the Forbes Global 2000 companies or their subsidiaries are using AMD64 technology. Companies that have recently joined these growing ranks include Allianz Group, Linde Group, Merck KGAA, Schering AG, and Quest Diagnostics. Additionally, government organizations that adopted AMD64 technology in the quarter include the U.S. Air Force, the U.S. Department of Census, the U.S. Navy SPAWAR, the Defense Contract Management Agency, the National Institute of Health, and the Defense Information Systems Agency (DISA).
- AMD expanded its global research and development operations, opening the Shanghai Research and Development Center to drive next-generation platform innovation and an advanced microprocessor development facility in Fort Collins, CO named the “Mile High Design Center.”
AMD’s outlook statements are based on current expectations and exclude ATI operations and ATI acquisition-related charges. The following statements are forward looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.
AMD expects demand for its products to be seasonally strong in the fourth quarter and sales to increase sequentially.
AMD will hold a conference call for the financial community at 2:30 p.m. PDT today to discuss third quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com
. The webcast will be available for 10 days after the conference call.
Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. Founded in 1969, AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide. For more information visit www.amd.com
This release contains forward-looking statements concerning sales for the fourth quarter of 2006, AMD’s technology and capacity introduction schedule and the timing of the completion of the planned acquisition of ATI Technologies, Inc, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from the company’s current expectations. Risks include the possibility that competitors, customers and suppliers of AMD or ATI may take actions that may negate the impact of the anticipated benefits of AMD’s acquisition of ATI; revenue, cost savings, growth prospects and any or other synergies expected from the planned acquisition will not be fully realized or will take longer to realize than expected; the planned acquisition will not be accretive as expected; the company will not achieve any year-end or longer-term targeted gross margins, research and development expenses, selling, general or administrative expenses, operating margins, capital structure or debt-to-capitalization ratio; there will be delays associated with integrating the companies, including employees and operations, after the planned acquisition is completed; goodwill and other long-lived assets resulting from the planned acquisition and the resulting impact on the company’s assets and earnings will be impaired; global business and economic conditions will worsen, resulting in lower than currently expected sales in the fourth quarter of 2006 and beyond; Intel Corporation’s pricing, marketing programs, product bundling, new product introductions or other activities targeting the company’s business will prevent attainment of the company’s current sales plans; demand for computers and, in turn, demand for the company’s products will be lower than currently expected; the company will not achieve its current product and technology introduction schedules; the company will require additional capital and will not be able to raise sufficient capital, on favorable terms or at all; the company will not be
able to obtain sufficient manufacturing capacity or components to meet demand for its products; solutions providers will not provide the infrastructure to support the company’s AMD64 technology in a timely fashion; and unfavorable results of operations of Spansion will adversely impact the company’s results of operations. We urge investors to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Annual Report on From 10-K for the year ended December 25, 2005 and AMD’s quarterly report on Form 10-Q for the quarter ended July 2, 2006.
(1)As a result of Spansion Inc.’s initial public offering (IPO) in December 2005, financial results for periods in 2006 compared to periods in 2005 do not correlate directly. In this press release, all references to and comparisons with periods in 2005 exclude the results of the company’s former Memory Products segment.
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron, AMD Geode, AMD Turion, and combinations thereof are trademarks of Advanced Micro Devices, Inc. Spansion is a trademark of Spansion, Inc. Other names used are for identification purposes only and may be trademarks of their respective owners.