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AMD beats forecasts with $219 million profit

Tough quarter though, and worse to come

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AMD saw net income beat forecasts at $219.3 million for the third quarter.

This was the fourth consecutive profitable quarter for the Intel rival, paving the way to its first full year in the black since 1995. It sold more than 3.6 million Athlon chips during the period, but admitted it was harder work than expected.

But sales of the Duron, Athlon's cheaper brother, will be slow in the fourth quarter because of a lack of cheap "integrated" chipsets, according to CEO Jerry Sanders.

And slow corporate demand may stall AMD's plans to get IBM, HP and Compaq to use the Athlon - in corporate PC lines - until the second half of next year.

On top of this, Mustang, Palomino and Morgan, server and notebook versions of Athlon, are being held back from the fourth quarter to the first part of next year.

AMD's sales were up 82 per cent in the period ended October 1 to $1.2 billion. The results compared to a loss of $99 million a year ago, and excluded a one-time gain of $337 million for the sale of Legerity, its voice communications business, and charges of $22 million relating to the retirement of senior secured notes.

PC chip and flash memory device sales more than doubled from Q3 the previous year - and were up ten per cent sequentially from this year's Q2.

Jerry Sanders said demand for AMD flash memory products continued to exceed supply. He also cited strong sales in cellular telephones, set-top boxes, automotive applications, Internet infrastructure products, and mobile Net appliance.

For the fourth quarter, AMD said it expected to sell out of Athlons, with total processor sales falling between eight and nine million. For the year, it said PC processor sales were expected to reach 25 million units, compared with 1999's 18.8 million.

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