AMD Reports Second Quarter Results

[Apoptosis]

AMD Reports Second Quarter Results

SUNNYVALE, Calif. — July 17, 2008 — AMD (NYSE:AMD) today reported second quarter 2008 revenue from continuing operations of $1.349 billion, a seven percent decrease compared to the first quarter of 2008 and a three percent increase compared to the second quarter of 2007. As part of its previously communicated review of its non-core businesses, AMD decided to divest its Handheld and DTV product businesses, and therefore is classifying them as discontinued operations1 for financial reporting.

In the second quarter of 2008, AMD reported a net loss of $1.189 billion, or $1.96 per share. For continuing operations, the second quarter loss was $269 million, or $0.44 per share, and the operating loss was $143 million. The results for continuing operations include a net favorable impact of $97 million, or $0.16 per share as described in the table below. Loss from discontinued operations was $920 million, or $1.52 a share, including asset impairment charges of $876 million, or $1.44 a share.

Reconciliation of GAAP to Non-GAAP Net Loss 2

(Millions except per share amounts) Q2-08 Q1-08 Q2-07
GAAP net loss /EPS $ (1,189 ) $ (1.96 ) $ (358 ) $ (0.59 ) $ (600 ) $ (1.09 )
Loss from discontinued operations (920 ) (1.52 ) (50 ) (0.08 ) (69 ) (0.13 )
Loss from continuing operations (269 ) (0.44 ) (308 ) (0.51 ) (531 ) (0.96 )
Gain on sale of 200mm equipment 193 0.32
Marketable securities impairment charges (36 ) (0.06 )
Amortization of acquired intangibles, integration and other charges (30 ) (0.05 ) (29 ) (0.05 ) (57 ) (0.10 )
Restructuring charges (30 ) (0.05 )
Debt issuance charges (5 ) (0.01 )
Non-GAAP net loss $ (366 ) $ (279 ) $ (469 )
Reconciliation of GAAP to Non-GAAP Operating Loss 2

(Millions) Q2-08 Q1-08 Q2-07
GAAP operating loss $ (143 ) $ (214 ) $ (396 )
Gain on sale of 200mm equipment 193
Amortization of acquired intangibles, integration and other charges (30 ) (29 ) (57 )
Restructuring charges (30 )
Non-GAAP operating loss $ (276 ) $ (185 ) $ (339 )

In the first quarter of 2008 AMD had revenue from continuing operations of $1.456 billion, a net loss of $358 million, a loss from continuing operations of $308 million and an operating loss of $214 million. In the second quarter of 2007 AMD had revenue from continuing operations of $1.309 billion, a net loss of $600 million, a loss from continuing operations of $531 million and an operating loss of $396 million.

“While we had a disappointing quarter financially, customer adoption of our recently introduced microprocessor and graphics products and platform offerings is strong, and we see increasing momentum across our businesses,” said Robert J. Rivet, AMD’s chief financial officer. “In the face of challenging macroeconomic conditions, we remain committed to achieving operating profitability in the second half of the year based on the continued ramp of new products, increased market penetration of our differentiated solutions, and continued actions designed to reduce our breakeven point.”

Second quarter 2008 gross margin was 52 percent. Excluding the positive impact associated with the sale of 200mm manufacturing equipment, second quarter 2008 gross margin was 37 percent, compared to 41 percent in the first quarter of 2008 and 34 percent in the second quarter of 2007.

Reconciliation of GAAP to Non-GAAP Gross Margin 2

(Millions except percentages) Q2-08 Q1-08 Q2-07
GAAP Gross Margin $ 696 $ 604 $ 439
GAAP Gross Margin % 52 % 41 % 34 %
Gain on sale of 200mm equipment 193
Other charges 2
Non-GAAP Gross Margin $ 503 $ 604 $ 441
Non-GAAP Gross Margin % 37 % 41 % 34 %
Segment Information

(Millions) Q2-08 vs Q1-08 vs Q2-07
Computing Solutions
Revenue $ 1,101 -8 % 0 %
Microprocessor Units - down flat
Microprocessor Average Selling Price (ASP) - down flat
Graphics (Including game console royalties)
Revenue $ 248 -5 % 18 %
Graphic Processor Units - down up
Graphic Processor Average Selling Price (ASP) - flat down

Footnotes in reference to tables above:

1 All prior periods have been reclassified to reflect discontinued operations.

2 In this press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures for net loss, operating loss and gross margin to reflect the exclusion of a gain on sale of 200mm equipment and certain charges as reflected in the tables. For net loss, the loss from discontinued operations was also excluded. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.

Current Outlook

AMD’s Current Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after July 17. AMD’s outlook statements are based on current expectations of its continuing operations. The following statements are forward looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

In the seasonally up third quarter, AMD expects revenue to increase in line with seasonality.

Additional Quarterly Highlights

-- More than 30 platforms based on Quad-Core AMD Opteron(TM)
processors are now shipping from AMD's largest global customers
including Dell, HP, IBM, and Sun Microsystems.

-- The benefits of AMD's scalable server technology resulted in AMD
Opteron processors powering three of the top five, and seven of the
top 20 supercomputer systems in the most recent Top 500(R)
supercomputer list.

-- AMD introduced its next-generation graphics family and delivered
the world's first teraFLOPS graphics chip, which is capable of
combining cinema-quality effects rendered in real-time with
game-like interactivity to produce the "Cinema 2.0 Experience."
The ATI Radeon(TM) HD 4800 graphics products captured the
performance crown at their respective price segments.

-- AMD announced the availability of its next-generation notebook
platform, combining AMD mobile processors and ATI Radeon graphics
for improved 3D and HD performance. Acer, Asus, Fujitsu,
Fujitsu-Siemens Computers, HP, MSI, NEC, Toshiba, and others
introduced notebooks based on the platform, which has more than 100
design wins to date.

-- AMD introduced AMD Business Class, an initiative dedicated to
developing AMD processor-based commercial desktop and notebook
solutions designed with business in mind. Acer, Dell,
Fujitsu-Siemens Computers, HP and Lenovo announced AMD Business
Class PCs.

-- AMD significantly expanded its processor offerings in the quarter,
including:

-- Ten mainstream, four energy-efficient and four high-performance
Quad-Core AMD Opteron processors

-- A high-performance unlocked AMD Phenom(TM) X4 processor,
three new AMD Phenom X3 triple-core processors, and a higher
performance 65W quad-core processor and 45W dual-core desktop
processors

-- Six mobile processors, including three AMD Turion(TM) X2
Ultra Dual-Core processors

-- Three low-power, dual-core processors for the embedded market.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its second quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com. The webcast will be available for 10 days after the conference call.

About AMD

Advanced Micro Devices (NYSE: AMD - News) is a leading global provider of innovative processing solutions in the computing and graphics markets. AMD is dedicated to driving open innovation, choice and industry growth by delivering superior customer-centric solutions that empower consumers and businesses worldwide. For more information, visit www.amd.com.

Cautionary Statement