It took a $1.25 billion settlement payout from archrival Intel to do it, but Advanced Micro Devices was able to report its first profitable quarter in three years Thursday. AMD, headquartered in Sunnyvale, Calif., posted earnings of $1.18 billion for the fourth quarter of 2009 on Street-beating sales of $1.64 billion.
"AMD's quarter marks another milestone in our transformation and underscores our growing momentum," said Dirk Meyer, AMD president and CEO in a statement accompanying the company's Thursday earnings report.
AMD's fourth-quarter revenue was up 18 percent compared to the third quarter of 2009 and up 42 percent compared to the same period in 2008. Financial analysts had pegged AMD's fourth-quarter revenue at $1.49 billion, a number the chip maker beat by some $150 million. The company also increased its gross margin from 38 percent in the third quarter to 41 percent in the fourth quarter.
For the full year, AMD had revenue of $5.4 billion, down from the $5.8 billion the chipmaker reported for 2008. But AMD managed positive net income in 2009 to the tune of $304 million, or $1.52 per share, a far cry from the $3.13 billion the company lost in 2008.
The Intel settlement, both announced and paid out in the just-concluded quarter, ended a long-standing dispute between AMD and Intel over alleged anti-competitive business practices by the larger chipmaker, as well as extending the two companies' cross-license agreement to produce the x86-based microprocessors that dominate the PC and server markets around the world.
"We promised to expose the truth about the monopolistic environment in which we were conducting business and we did," Meyer said during a call with financial analysts on Thursday.
The $1.25 billion cash infusion from Santa Clara, Calif.-based Intel was an obvious factor in AMD's return to profitability for both the quarter and the year.
Other helpful factors included major restructuring and cost-cutting at the company, as well as last year's spin-off of its manufacturing assets to form Globalfoundries. Beginning in the first quarter of 2010, Globalfoundries' financial results will no longer be consolidated into AMD's own fiscal reporting, the company said.
Meyer attributed AMD's better-than-expected fourth-quarter sales to robust holiday sales, increased enterprise spending that was led by server sales, and the success of AMD's industry-leading DirectX 11-enabled ATI graphics products.
He also singled out some highlights of the quarter -- six-core Opteron server processors introduced last spring now account for 60 percent of AMD's server revenues, and the company's new Fusion channel partner program gained 100 new premier partners in its first full quarter of operation.
Since beginning a lengthy string of disappointing quarters in 2006, AMD struggled with product delays and write-downs associated with its acquisition of ATI Technologies that led to quarterly losses that sometimes topped $1 billion.
But such disastrous quarters have diminished in the 18 months since Meyer replaced Hector Ruiz as CEO of AMD. Meanwhile, the ATI business has been largely integrated into the company, and the chip maker has kept to and sometimes even beat its product roadmap targets.
With all that progress, plus a giant chunk of change from Intel, it appears that we can officially take AMD off the corporate death-watch list.