updated 10/14/2005 3:26:34 PM ET 2005-10-14T19:26:34

Advanced Micro Devices Inc.’s profit climbed 73 percent thanks to its successful processor business, but the company continued to cope with a competitive memory-chip market.

The Sunnyvale-based company is the largest maker of semiconductors, after Intel Corp.

It posted third-quarter net income of $76 million, or 18 cents a share, compared with net income of $43.8 million, or 12 cents a share, in the same quarter last year.

Revenue climbed 23 percent to $1.52 billion from $1.24 billion in the same period a year ago.

Analysts surveyed by Thomson Financial were expecting earnings of 8 cents a share on $1.38 billion in revenue.

The computation products group, which includes computer processors and chipsets, reported third-quarter sales of $969 million, up 44 percent from $673 million a year earlier. Operating earnings for the unit more than doubled to $209 million from $89 million.

“This was another record-breaking quarter for AMD’s microprocessor business,” said AMD’s chief financial officer, Robert J. Rivet, in prepared remarks Tuesday. “Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth.”

However, the company faced problems in its memory-chip business, called Spansion. The business, which makes chips called flash memory that are used to store data in cell phones and other gadgets, has struggled with strong pricing pressure from industry leader Intel.

Memory sales fell 4 percent to $516 million from $538 million. The unit swung to an operating loss of $50 million from a year-go operating profit of $15 million.

AMD owns 60 percent of Spansion, with the rest held by Fujitsu Ltd. The business has filed for a public offering that would leave AMD a majority owner.

AMD reported results after the close of trading Tuesday.

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