Computer sales may be recovering, but Advanced Micro Devices was still bleeding money in the third quarter.

Never-the-less, AMD on Thursday posted a narrower loss than most Wall Street soothsayers had predicted. Similar to Intel, which reported its Q3 yesterday, AMD said its shipments rose from the previous quarter, thanks to strong demand for notebooks lead by a better-than-expected back-to-school PC purchasing cycle.

"Growth in microprocessor and graphics unit shipments drove an 18 per cent sequential revenue increase, while improved factory utilization rates, higher microprocessor average selling price and an increase in 45nm product shipments resulted in a gross margin improvement from the prior quarter," said AMD chief executive Dirk Meyer in a statement.

AMD lost $128m in the third quarter ended September 26, an improvement from the loss of $134m in the same period last year. But looking at Non-GAAP figures in Q3 (which essentially removes GlobalFoundries and gives a better view of AMD Product Company) net losses were only $2m.

Net revenue was $1.396bn, a hefty 22 per cent decrease from $1.78bn year-over-year but an 18 per cent jump from Q2 2009.

The company's CPU segment generated revenues of $1.07m in Q3, down 23 per cent year-over-year, and up 17 per cent sequentially. AMD puts a footnote on figure, however, claiming that if you exclude the $191m process technology revenue from Q3 2008, the segment's revenue would only be down 11 per cent compared to last year.

Its graphics biz revenue was $305m, down 21 per cent year-over-year and up 22 per cent sequentially.

AMD's gross margin fell to 41.9 per cent, compared to 51 per cent year-over-year and 37 per cent in the prior quarter.

AMD said during its investor conference call Thursday that while it has already begun selling its next-generation Tigres platform components to OEMs to prepare them for the Christmas season, most of its strength in notebook sales came from its existing Puma platform.

The company didn't give an numerical estimate on sales in the upcoming quarter, but said revenues would be "up modestly" for the fourth quarter of 2009. ®

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