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October 6, 1998


By CBR Staff Writer

Advanced Micro Devices Inc has revealed a huge jump in third quarter sales of its K6-2 processor and the Sunnyvale, California-based company said it was experiencing a worldwide strengthening of demand in the PC market. Against all expectations, AMD broke even in its third quarter, with net profits of $1.0m, up from losses last time of $31.7m while revenues were up 15% over last year at $686m. Sequentially, revenues rose 30% from AMD’s disappointing second quarter, boosted by sales of AMD’s Windows compatible K6-2 microprocessor, which increased by 70%. Unit shipments of the K6-2 rose by one million to 3.8 million units. The worst is behind us, said chief executive Jerry Sanders, buoyed up by reaching the break even mark three months ahead of schedule. Asked if the upturn was sustainable or merely a by-product of the normal Christmas increase in demand, Sanders reiterated his claim that worldwide PC demand was strong. This is in marked contrast to the second quarter, when AMD declined to comment on the outlook, saying visibility was extremely limited. Sanders said his company was continuing to tackle Intel Corp head on in the retail PC market, where AMD’s on-going sales proposition is to give comparable microprocessor performance for 25% less cash. He said the latest figures from PC Data for the three weeks to mid September gave AMD a 48% share of the total US retail market, versus 43% for Intel. Sanders said that if K6-2 sales continued at this pace, September would mark the first month ever when AMD outsold Intel in the retail space. However, AMD’s Communications Group and Memory Group returned only flat sales in the quarter, blamed on a weak Japanese market and a continuing fall in EPROM prices that have been declining at 40% per year. The company promised new products to boost networking sales, including the imminent launch of a networking chip for the home market which would allow multiple PC’s to be connected over a home’s existing internal phone lines at 1Mbit per second. AMD’s results were released after the close of trading, but the share price closed up 8% on Tuesday. The Nasdaq composite index closed down 1.68%.

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