Is AMD Returning to Profitability?

The old saying, essentially, is, “From here, things can only get better.” From where AMD was last April, that’s indeed what happened – and perhaps that’s no surprise. Yesterday, the company reported rising chip shipments that led to increased revenues and recovering profit margins, though still not yet near the point of being considered “healthy.”

A deal announced just two months ago between AMD and one-time Intel-exclusive producer Toshiba is being credited by analysts for an 82% increase in mobile processor shipments over AMD’s second fiscal quarter of last year, even though in the real world, AMD could not possibly have shipped that many Turions in a 45-day period.

More likely, the surge was brought on by long-time AMD partner Acer, whose resurgence to most likely the world’s #3 notebook computer manufacturer now has another AMD partner, HP, combating it in the courtroom. The Toshiba bounty will most likely be recorded during the third quarter, which will only bring more good news for AMD.

It could really use the good news, after a solid year of being hammered by Intel in all the departments where AMD had demanded that it play fair, including price and performance. While it managed to report a loss for the June quarter of $457 million on $1.37 billion of revenue, that loss was indeed narrower than for the first quarter – as predicted – and revenue was up 11.3% over the previous quarter.

Now, if you put two and two together (as many analysts neglect to do), you conclude that the 82% mobile CPU shipment increase – part of a 38% overall shipment increase over the prior quarter – wasn’t reflected in revenues that were only marginally higher, on gross margin up only 5% on the quarter to 33%.

Read: [Betanews]