By Duncan Martell
SAN FRANCISCO (Reuters) - Advanced Micro Devices , the world's second-largest maker of computer microprocessors, on Thursday posted a narrower-than-expected quarterly loss thanks to strong chip prices and shipments, sending shares up 3.5 percent.
AMD took a $1.68 billion charge from its purchase of graphics chipmaker ATI but said its main business amid higher average prices, cost cuts and record product shipments of microprocessors, the brains of personal computers.
Fears of a U.S. recession have cast a pall over technology shares this week, especially after disappointing results from AMD's bigger rival, market leader Intel Corp , .
But AMD said it expects revenue in the current quarter to decrease from the previous one in typical seasonal patterns, rather than an economy-driven downward acceleration.
AMD said its fourth-quarter net loss increased to $1.77 billion, or $3.06 per share, from $576.0 million, or $1.08, per share, a year ago. Revenue was unchanged at $1.77 billion, while analysts were looking for $1.79 billion.
Excluding items, AMD had a per-share loss of 17 cents. On that basis, analysts expected a loss of 32 cents, as compiled by Reuters Estimates.
"If you want to look at the sunny side, despite trailing Intel on various metrics, AMD seems to be at the sweet spot of the market," said CRT Capital Group analyst Ashok Kumar, referring to emerging markets and a move toward lower-cost processors.
AMD stumbled in 2007, missing expected shipment dates of a key microprocessor as rival Intel regained its footing after missteps of its own in 2005 and 2006. The world's biggest chipmaker has since regained market share once lost to AMD.
AMD's average selling price for its chips has historically been about one-half of Intel's, Kumar said, adding that prices should improve in 2008 after cratering last year.
"From a longer-term perspective, AMD is going to be around for no other reason than PC suppliers want a credible second-source supplier so Intel doesn't have a license to print money," Kumar said.
AMD's results came two days after Intel reported a 51 percent rise in fourth-quarter net income yet simultaneously sounded a cautious note about the first quarter amid concerns of a possible U.S. recession.
Intel, like AMD, said, however, that it saw no signs of a slowdown in the fourth quarter, and noted it had not yet seen any indications of a precipitous slowdown in demand so far in the first quarter.
AMD is also on track to hit the forecast and milestones it laid out to analysts in December, the chipmaker's CEO said on a conference call.
"There has been no change in any of the information we gave you and projection we gave you into next year," Chief Executive Hector Ruiz said on a conference call with analysts.
AMD Chief Financial Officer Robert Rivet said the Sunnyvale, California, company shipped a record number of microprocessors in the fourth quarter, including 400,000 quad-core chips.
Rivet said its improved gross margin was driven by higher sales of new products, higher average selling prices and cost containment efforts.
AMD stock fell 23 cents, or 3.5 percent, to $6.34 on the New York Stock Exchange amid a broad sell-off in U.S. equities. In after-hours trading, AMD shares traded up to $6.56.
(Editing by Andre Grenon/Jeffrey Benkoe)