Hardware / CPU/Chipset

Turion 64 Sales Up 50 Percent

AMD reports strong third quarter in sales

AMD has reported its third quarter earnings and the results were quite favorable. The company reported total sales over $1.3 billion, operating income of nearly $120 million and a net income of $134 million USD. These earning represented a 9 percent increase from Q2 06 and a 32 percent increase from Q3 05.

The real star during AMD's third quarter, however, was the Turion 64 processor. AMD saw saw demand for the mobile processor grow 50 percent along with increased average selling prices. Opterons were also strong performers.

“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.”

Despite the increase in sales, AMD's gross margin fell 5.4 percent in
the second quarter of 2006 and 4 percent compared to 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. Analysts feel the decline was due competitive pricing against Intel.

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.

AMD also highlighted these points as part of its third quarter report:

• AMD and ATI 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.
  - IBM unveiled five new AMD Opteron-based mainstream server platforms that are quad-core ready.


• AMD announced broad support for its Torrenza Initiative by leading server manufacturers including Cray, Dell, Fujitsu Siemens Computers, HP, IBM and Sun Microsystems.


• 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.”