AMD Banking On Fusion To Jumpstart Growth In 2011

AMD on Thursday reported fourth quarter and annual earnings for 2010 that topped analysts estimates, thanks to strong growth in the graphics segment.

AMD reported flat fourth quarter revenue of $1.65 billion compared to the same period one year ago. That figure handily exceeded the average analyst forecast of $1.54 billion according to Thomson Reuters.

"We are seeing better seasonal demand," said Thomas Seifert, interim CEO of AMD, in a conference call. Despite topping estimates, AMD's net income fell dramatically year-over-year because of a $1.24 billion payment the chip maker received in its settlement with Intel. AMD reported fourth quarter profit of $375 million, down from nearly 70 percent from the $1.18 billion profit the company booked a year ago.

Excluding the Intel settlement and other special charges, AMD's fourth quarters earnings reach 14 cents per share, which surpassed analysts estimates of 11 cents per share.

AMD's annual sales for fiscal 2010 totaled $6.49 billion, a 20 percent increase from fiscal 2009. The company reported $471 million of profit for the year, up from $293 million in 2009. Its operating income was $848 million, up from $684 million in 2009.

Revenue from AMD's Computing Solutions segment was flat both sequentially and year-over-year. Revenue from AMD's graphics segment increased nine percent sequentially and was flat year-over-year.

AMD predicted that Q1 2011 revenue will decrease slightly or remain flat sequentially, which is better than usual for the first quarter. The company is putting a strong emphasis on its new Fusion APUs (accelerated processing units) to drive business this year.

"AMD enters 2011 with significant momentum, amplified by the successful launch of our first Fusion APUs," Seifert said in a statement. "I am confident we can drive profitable growth based on the strength of new products we will bring to market. Our customers recognize that Fusion APUs are at the core of delivering the world's most vivid digital experiences."

Thursday's report was the first AMD earnings call under Seifert, who replaced Dirk Meyer as CEO on an interim basis after Meyer's unexpected resignation on Jan. 10. Seifert said that the search for AMD's next CEO is a priority, but that AMD will not offer further details about the search until it is over.

"We will update you should events warrant," Seifert said.