ACADEMIA

For the quarter ended March 26, 2006, AMD has reported sales of $1.33 billion, operating income of $259 million, and net income of $185 million, or $0.38 per share. By contrast, in the first quarter of 2005, excluding the Memory Products segment, AMD reported sales of $780 million and operating income of $64 million. In the fourth quarter of 2005, AMD reported sales of $1.35 billion and operating income of $268 million. AMD broadened its family of product offerings in the quarter, including launching five dual-core AMD Opteron processors, which were incorporated into servers built by HP, IBM and Sun Microsystems. Record Opteron processor sales were driven by strong demand for dual-core processors for servers and workstations. "AMD had another great quarter," said Robert J. Rivet, AMD's chief financial officer. "Building on our positive momentum, we believe we once again gained dollar market share based on strong customer demand for AMD64 single and multi-core processors. We expanded our global customer base in the quarter, achieved record AMD Opteron processor sales, increased our average selling price (ASP), and realized year-over-year sales growth of 71 percent. Our manufacturing strategy execution was excellent and our technology transitions remain on track, with 65nm production shipments expected in the second half of 2006. "We also continued to execute against our plans to improve our balance sheet. We had a successful equity offering, reduced debt and lowered our debt-to-capital ratio to 12 percent." First quarter gross margin increased to a record 58.5 percent, compared to 57.3 percent in the fourth quarter of 2005. The increase was largely due to product mix improvement, higher desktop and mobile ASPs, and manufacturing efficiencies. Operating income was $259 million in the first quarter, up from $64 million in the first quarter of 2005 and down slightly from $268 million in the fourth quarter of 2005. AMD expects second quarter sales to be flat to slightly down seasonally from the first quarter of 2006. If achieved, this would approximate a 65 percent increase from comparable sales in the second quarter of 2005.