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Cheers for AMD's shrinking losses

Or are they for Fusion?

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Wall Street moneymen pumped AMD's stock up by as much as seven per cent after the chip maker announced lower year-on-year losses Thursday, a gain that settled back to about four per cent after the initial buzz mellowed.

In its third fiscal quarter, AMD announced on Thursday, the company took in $1.62bn for a net loss of $118m. During the same period in 2009, AMD's revenues were $1.4bn for a net loss of $128m.

According to the analysts at Thomson Reuters, the word on the Street was to expect revenue of $1.6bn. That $200m lagniappe is certainly not earthshaking, but with the rough ride that AMD has been on in the past few years — it lost $134m in the third quarter of 2008 — it was welcome.

But chief financial Thomas Seifert cautioned that the company's current quarter won't be a barn-burner. "For the fourth quarter of 2010," he told analysts and reporters listening in on a conference call announcing the results, "we expect revenue to be approximately flat as compared to the third quarter."

Any significant improvement in AMD's lot is on hold, waiting for the appearance of its Fusion family of APUs — AMD's term for accelerated processing units that combine CPU, GPU, and potentially other accelerators on the same die.

"Our first APU platforms, code-named Brazos and based on our Zacate and Ontario processors, are expected... early next year," AMD president and chief executive Dirk Meyer told his audience.

"Brazos is ahead of schedule," Meyer said, "with customer shipments on track for the fourth quarter and customer systems available early next year."

Meyer clearly wanted his listeners to hold high hopes for his APUs. "The AMD Fusion family is a game-changer," he said. "It will significantly expand our addressable market and is already changing the way the industry harnesses the power of the GPU."

Production shipments of Brazos' follow-on, the 32-nanometer Llano APU line, are planned for the first half of 2011, Meyer said, claiming that "our AMD Fusion strategy is changing the industry."

But the industry itself is changing due to the tabletmania phenomenon — and Meyers admitted that AMD is behind the curve on that score: "I think you'll see AMD-based solutions in tablets in the next couple of years," he said.

"Our overall strategy with respect to tablets is to first observe that that's a form factor that we think is going to grow over time and be important over time... and one which we'll devote specific R&D energy towards when the market is big enough to justify that investment."

For now, Meyer said, AMD will focus on expanding its notebook-market penetration, then worry about tablets. "Frankly," he said, "we're still so small in the notebook market that given all the opportunities in front of us it doesn't make sense for us to start turning R&D dollar spending towards the tablet market yet."

In other words, let's get out of this pool of red ink, and then we'll figure out what our tablet strategy should be.

With ARM powering the lion's share of low-power parts, and Intel CEO Paul Otellini telling the world just yesterday that Chipzilla would "win" in the tablet market, Meyer's caution may be wise. ®

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