AMD Reports Third Quarter Results

- 18 Percent Sequential Revenue Increase Driven by Record Microprocessor Unit Shipments and Increased Graphics Segment Revenue -

SUNNYVALE, Calif.--(BUSINESS WIRE)--

AMD (NYSE:AMD) today reported third quarter 2007 revenue of $1.632 billion, an 18 percent increase compared to the second quarter of 2007 and a 23 percent improvement compared to the third quarter of 2006(1). In the third quarter, AMD reported an operating loss of $226 million, and a net loss of $396 million, or $0.71 per share. Third quarter results include a negative impact of $120 million, or $0.22 per share, due to ATI acquisition-related, integration and severance charges and impairment of assets. In the second quarter of 2007, AMD reported revenue of $1.378 billion and an operating loss of $457 million. In the third quarter of 2006, AMD reported revenue of $1.328 billion and operating income of $121 million.

"We are encouraged by the progress we made in our third quarter financial results. We delivered a strong revenue increase, gained 8 percentage points of gross margin and reduced our operating loss by more than half," said Robert J. Rivet, AMD's Chief Financial Officer. "We sold a record number of microprocessors through our distribution channel and began revenue shipments of Quad-core AMD Opteron(TM) processors in the quarter.

"Graphics segment revenue increased 29 percent sequentially, as customers increasingly adopted AMD's new ATI Radeon HD(TM) 2000 series of graphics processors."

Third quarter charges of $120 million consisted of ATI acquisition-related, integration and severance charges of $78 million and asset impairments of $42 million associated with our ownership of Spansion, Inc. common stock.

($ millions)                             Q3-07      Q2-07    Q3-06(1)
-------------------------------------- ---------- ---------- ---------
Revenue                                $   1,632  $   1,378  $   1,328
-------------------------------------- ---------- ---------- ---------
GAAP Operating income (loss)           $    (226) $    (457) $     121
-------------------------------------- ---------- ---------- ---------
Acquisition-related, integration and
 severance charges (ARC)               $      78  $      94  $       6
-------------------------------------- ---------- ---------- ---------
Non-GAAP Operating income (loss) (2)
 (3)                                   $    (148) $    (363) $     127
-------------------------------------- ---------- ---------- ---------

Third quarter 2007 gross margin was 41 percent, compared to 33 percent in the second quarter of 2007 and 51 percent in the third quarter of 2006. The increase from the prior quarter was due to increased microprocessor unit shipments, manufacturing efficiencies, improved inventory management, and a richer product mix in the Computing Solutions and Graphics segments.

Computing Solutions

Third quarter Computing Solutions segment revenue was $1.283 billion, a 17 percent sequential increase. The increase was driven primarily by a 19 percent increase in microprocessor revenue. Microprocessor unit shipments increased 16 percent sequentially. Mobile processor unit shipment growth remained strong, increasing 41 percent sequentially and 68 percent year-over-year.

Graphics

Graphics segment revenue of $252 million grew 29 percent from the second quarter of 2007. The success of the new ATI Radeon HD 2000 series of graphics processors led to increased unit shipments and revenue.

Consumer Electronics

Third quarter Consumer Electronics segment revenue was $97 million, compared with $85 million in the second quarter of 2007 driven by improved handheld unit sales and increased game console royalties.

Current Outlook

AMD's outlook statements are based on current expectations. 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 fourth quarter, AMD expects revenue to increase in line with seasonality.

    Additional Highlights

    --  AMD introduced the world's most advanced x86 processor, the
        Quad-Core AMD Opteron processor.

    --  HP, Lenovo, NEC, Packard Bell, Samsung and Toshiba introduced
        new AMD platforms featuring the combination of AMD processors
        and the AMD690 chipset.

    --  Dell, HP, Lenovo, and Toshiba, among others, began offering
        desktop and notebook systems featuring the ATI Radeon HD 2000
        series of graphics processors.

    --  AMD was named Best-in-Class Supplier for Standard Silicon in
        Sun Microsystems' 2007 Supplier Awards program, was also
        awarded CMP Channel's VAR Business 2007 Tech Innovator of the
        Year award for the server category, and AMD's quad-core
        processor technology won 2007 Best of VMworld Awards for the
        Green Computing category.

    --  AMD licensed graphics technology to Freescale Semiconductor
        and Qualcomm.

    --  AMD completed a $1.5 billion convertible debt offering and
        used the net proceeds, together with available cash, to repay
        in full the $1.7 billion outstanding balance of the term loan
        used to acquire ATI.

    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 third 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) is a leading global provider of innovative processing solutions in the computing, graphics and consumer electronics 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

This release contains a forward-looking statement concerning revenue for the fourth quarter of 2007 which is made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects," and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation's pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company's business will prevent attainment of the company's current plans; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company's cost reduction efforts will not be effective; customers stop buying the company's products or materially reduce their operations or demand for its products; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market and at mature yields on a timely basis; the company's competitors, customers and suppliers may take actions that will negate the anticipated benefits of the company's acquisition of ATI; demand for computers and consumer electronics products and, in turn, demand for the company's products will be lower than currently expected; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the fourth quarter of 2007 and beyond; there will be unexpected variations in market growth and demand for the company's products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition to advanced manufacturing process technologies in a timely and effective way, consistent with planned capital expenditures; the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; and the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will under-utilize its microprocessor manufacturing facilities. Investors are urged to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

AMD, the AMD Arrow logo, AMD Opteron, and combinations thereof, and ATI, the ATI logo, and Radeon are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owners.

(1) As a result of the acquisition of ATI, 2006 financial results only include the results of the former ATI operations from October 25 through December 31, 2006. Therefore, financial results for the third quarter 2007 do not correlate directly to those for the third quarter 2006.

(2) In this press release, AMD has provided non-GAAP financial measures for operating income (loss) to reflect its financial results without acquisition-related, integration and severance charges. Management believes this non-GAAP presentation makes it easier for investors to compare current and historical period operating results.

(3) Includes stock-based compensation expense.

ADVANCED MICRO DEVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions except per share amounts and percentages)


                      Quarter Ended               Nine Months Ended
---------------------------------------------- -----------------------
            Sept. 29,   June 30,     Oct. 1,    Sept. 29,    Oct. 1,
              2007        2007        2006        2007        2006
           (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------- -----------------------

Net
 revenue   $    1,632  $    1,378  $    1,328  $    4,243  $    3,876

Cost of
 sales            963         917         645       2,766       1,724

---------------------------------------------- -----------------------

Gross
 margin           669         461         683       1,477       2,152

Gross
 margin %          41%         33%         51%         35%         56%

Research
 and
 devel-
opment            467         475         277       1,374         820

Marketing,
 general
 and
 adminis-
trative           352         365         279       1,052         844

Amort-
ization of
 acquired
 intan-
gible
 assets
 and inte-
gration
 charges           76          78           6         238           6

---------------------------------------------- -----------------------

Operating
 income
 (loss)          (226)       (457)        121      (1,187)        482

Interest
 income            19          19          31          54          94
Interest
 expense          (95)        (99)        (18)       (272)        (59)
Other
 income
 (ex-
pense),
 net               (1)         (9)         (2)         (8)        (15)

---------------------------------------------- -----------------------

Income
 (loss)
 before
 minority
 interest,
 equity in
 net loss
 of
 Spansion
 Inc. and
 other and
 income
 taxes           (303)       (546)        132      (1,413)        502

Minority
 interest
 in
 consol-
idated
 subsid-
iaries             (9)         (9)         (7)        (26)        (20)

Equity in
 net loss
 of
 Spansion
 Inc. and
 other            (57)        (13)        (10)        (86)        (40)

---------------------------------------------- -----------------------

Income
 (loss)
 before
 income
 taxes           (369)       (568)        115      (1,525)        442

Provision
 (benefit)
 for
 income
 taxes             27          32         (21)         82          32

---------------------------------------------- -----------------------

Net income
 (loss)    $     (396) $     (600) $      136  $   (1,607) $      410

---------------------------------------------- -----------------------

Net income
 (loss)
 per
 common
 share

Basic      $    (0.71) $    (1.09) $     0.28  $    (2.92) $     0.86

Diluted    $    (0.71) $    (1.09) $     0.27  $    (2.92) $     0.82

---------------------------------------------- -----------------------

Shares
 used in
 per share
 calcu-
lation

Basic             554         552         486         551         478
Diluted           554         552         497         551         497
ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
                                      Sept. 29,   June 30,   Dec. 31,
                                        2007        2007      2006(a)
                                     (Unaudited) (Unaudited)
----------------------------------------------------------------------

Assets

Current assets:
   Cash, cash equivalents and
    marketable securities            $    1,528  $    1,594  $  1,541
   Accounts receivable, net                 682         648     1,140
   Inventories                              839         892       814
   Prepaid expenses and other
    current assets                          432         410       443
   Deferred income taxes                     62          54        25

----------------------------------------------------------------------

         Total current assets             3,543       3,598     3,963

Property, plant and equipment, net        4,725       4,575     3,987
Goodwill                                  3,165       3,180     3,217
Investment in Spansion Inc.                   -         326       371
Acquisition related intangible
 assets, net                                994       1,065     1,207
Other assets                                507         480       402

----------------------------------------------------------------------

Total Assets                         $   12,934  $   13,224  $ 13,147
======================================================================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable                  $    1,064  $      985  $  1,338
   Accrued compensation and benefits        198         192       177
   Accrued liabilities                      833         768       716
   Deferred income on shipments to
    distributors                            106          92       169
   Current portion of long-term debt
    and capital lease obligations           218         219       125
   Other current liabilities                283         220       327
----------------------------------------------------------------------

         Total current liabilities        2,702       2,476     2,852

Deferred income taxes                        32          56        31
Long-term debt and capital lease
 obligations, less current portion        5,117       5,318     3,672
Other long-term liabilities                 650         610       517
Minority interest in consolidated
 subsidiaries                               308         292       290

Stockholders' equity:
   Capital stock:
      Common stock, par value                 6           6         5
      Capital in excess of par value      5,280       5,237     5,316
   Retained earnings (deficit)           (1,328)       (932)      308
   Accumulated other comprehensive
    income                                  167         161       156
----------------------------------------------------------------------

         Total stockholders' equity       4,125       4,472     5,785

----------------------------------------------------------------------

Total Liabilities and Stockholders'
 Equity                              $   12,934  $   13,224  $ 13,147
======================================================================

(a)Amounts as of December 31, 2006 were derived from the December 31,
    2006 audited financial statements.
ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA
(Unaudited)
(Millions except headcount and percentages)


                               Quarter Ended        Nine Months Ended
----------------------------------------------------------------------
                        Sept. 29, June 30, Oct. 1,  Sept. 29, Oct. 1,
Segment Information (1)   2007      2007     2006     2007      2006
-----------------------

--------------------------------------------------- ------------------

Computing Solutions (2)
    Net revenue         $  1,283  $ 1,098  $ 1,328   $ 3,299  $ 3,880
    Operating income
     (loss)             $   (112) $  (258) $   167   $  (691) $   615

Graphics (3)
    Net revenue              252      195        -       644        -
    Operating income
     (loss)                   (3)     (50)       -       (88)       -

Consumer Electronics
 (4)
    Net revenue               97       85        -       300        -
    Operating income
     (loss)                   (3)     (22)       -       (29)       -

All Other (5)
    Net revenue                -        -        -         -       (4)
    Operating income
     (loss)                 (108)    (127)     (46)     (379)    (133)

Total AMD
    Net revenue         $  1,632  $ 1,378  $ 1,328   $ 4,243  $ 3,876
    Operating income
     (loss)             $   (226) $  (457) $   121   $(1,187) $   482


--------------------------------------------------- ------------------

Other Data
-----------------------

Depreciation &
 amortization
 (excluding
 amortization of
 acquired intangible
 assets)                $    263  $   255  $   200   $   761  $   567

Capital additions       $    419  $   414  $   425   $ 1,419  $ 1,191

Headcount                 16,498   16,719   11,609    16,498   11,609

--------------------------------------------------- ------------------

Adjusted EBITDA (6)     $     60  $  (143) $   333   $  (279) $ 1,068
-----------------------

--------------------------------------------------- ------------------


(1) Starting in Q406, the Company no longer allocates employee stock-
     based compensation and profit sharing expenses to its segments.
     These expenses are recorded in the All Other category. Prior
     period information has been restated to conform to current period
     presentation.
(2) Computing Solutions segment includes what was formerly the
     Computation Products segment and the Embedded Products segment as
     well as revenue from sales of chipsets sold by ATI prior to AMD's
     acquisition of ATI.
(3) Graphics segment includes graphics, video and multimedia products
     developed for use in desktop and notebook computers, including
     home media PCs, professional workstations and servers.
(4) Consumer Electronics segment includes products and revenue related
     to mobile phones and PDAs, digital televisions and other consumer
     electronics and revenue for royalties received in connection with
     sales of game console systems that incorporate the Company's
     products.
(5) All Other category includes employee stock-based compensation
     expense, profit sharing expense, certain operating expenses and
     credits that are not allocated to the operating segments, and
     Personal Internet Communicator (PIC) related activities in Q306
     and for nine months ended Q306. Also included in this category
     are the ATI acquisition-related, integration, and severance
     charges. Details of the ATI acquisition-related, integration and
     severance charges and employee stock-based compensation expense
     are shown below.
     ATI acquisition-related, integration and severance charges:
                                       Quarter Ended     Nine Months
                                                             Ended
                                     Q307   Q207   Q306   Q307   Q306
                                    ------ ------ ------ ------ ------
     Amortization of acquired
      intangible assets             $   71 $   71 $    - $  213 $    -
     Integration charges                 5      7      6     25      6
                                    ------ ------ ------ ------ ------
       ATI acquisition-related and
        integration charges         $   76 $   78 $    6 $  238 $    6
     Severance                           2     16      -     18      -
                                    ------ ------ ------ ------ ------
         Total                      $   78 $   94 $    6 $  256 $    6
                                    ====== ====== ====== ====== ======


       Employee stock-based compensation expense:
                                       Quarter Ended      Nine Months
                                                              Ended
                                    Q307    Q207    Q306   Q307  Q306
                                   ------- ------- ------ ------ -----
       Cost of sales               $     2 $     2 $    2 $    6 $   6
       Research and development         14      14      6     42    17
       Marketing, general and
        administrative                  11      15      9     38    27
                                   ------- ------- ------ ------ -----
                                   $    27 $    31 $   17 $   86 $  50
                                   ======= ======= ====== ====== =====



(6)  Reconciliation of Net income (loss) to Adjusted EBITDA(b)
                                    Quarter Ended       Nine Months
                                                            Ended
                                 Q307    Q207    Q306    Q307    Q306
                                ------- ------- ------ -------- ------
     Net income (loss)          $ (396) $ (600) $ 136  $(1,607) $  410
     Depreciation and
      amortization                 263     255    200      761     567
     Amortization of acquired
      intangible assets             71      71      -      213       -
     Interest expense               95      99     18      272      59
     Provision (benefit) for
      income taxes                  27      32    (21)      82      32
     -------------------------- ------- ------- ------ -------- ------
     Adjusted EBITDA            $   60  $ (143) $ 333  $  (279) $1,068
                                ======= ======= ====== ======== ======

(b)  The Company defines Adjusted EBITDA as net income (loss) adjusted
      for depreciation and amortization, amortization of acquired
      intangible assets, interest expense and taxes. The Company
      calculated and communicated Adjusted EBITDA because management
      believes it is of interest to investors and lenders in relation
      to its overall capital structure and its ability to borrow
      additional funds. The Company's calculation of Adjusted EBITDA
      may or may not be consistent with the calculation of this
      measure by other companies in the same industry. Investors
      should not view Adjusted EBITDA as an alternative to the U.S.
      GAAP operating measure of net income or U.S. GAAP liquidity
      measures of cash flows from operating, investing and financing
      activities. In addition, Adjusted EBITDA does not take into
      account changes in certain assets and liabilities as well as
      interest and income taxes that can affect cash flows.

Source: Advanced Micro Devices