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AMD reported sales of $1.260 billion and net income of $11 million, amounting to $0.03 per diluted share, for the quarter ended June 26, 2005. Second quarter sales were flat compared to the second quarter of 2004 and increased three percent from the first quarter of 2005. In the second quarter of 2004, AMD reported sales of $1.262 billion and net income of $32 million, or $0.09 per diluted share. In the first quarter of 2005, AMD reported sales of $1.227 billion and a net loss of $17 million, or $0.04 per share. The operating loss was $7 million as compared to operating income of $72 million in the second quarter of 2004 and an operating loss of $46 million in the first quarter of 2005. "Our microprocessor business delivered another record quarter driven by increased demand for AMD server and mobile processors from our largest global OEM customers," said Robert J. Rivet, AMD's chief financial officer. "Once again we continued to gain momentum with microprocessor sales growth increasing 38 percent compared to the second quarter of 2004. The solid overall demand was enhanced by our newer processor offerings. Strong Dual-Core AMD Opteron processor sales contributed to an 89 percent revenue increase in our server products from the prior quarter. This demonstrates the acceptance of the AMD64 platform by enterprise customers. Likewise, the AMD Turion64 processor captured more than 60 design wins and drove record mobile sales in the thin-and-light mobile PC category." "Memory Products Group sales increased slightly in the quarter, driven by record MirrorBit Flash memory sales and overall higher unit demand." Business Overview Second quarter gross margin was 39 percent compared to 34 percent in the first quarter of 2005. The improvement was largely due to record Computation Products Group (CPG) gross margins. Record CPG sales of $767 million increased 38 percent from the second quarter of 2004 and increased two percent from $750 million in the first quarter of 2005. CPG generated record operating income of $110 million in the second quarter, up from $92 million in the first quarter of 2005. CPG's second quarter sales growth was driven by record server and mobile processor sales, a six percent higher overall average selling price, and record sales to our largest global OEM customers. Geographically, sales were especially strong in China, North America and all of our high-growth markets. Memory Products Group sales of $462 million decreased 31 percent from the second quarter of 2004 and increased three percent from $447 million in the first quarter or 2005. Memory Products Group incurred an operating loss of $90 million, as compared to an operating loss of $110 million in the first quarter of 2005. MirrorBit Flash memory sales accelerated to more than 20 percent of total Memory Products Group sales in the quarter, with increased wireless demand for second-generation, 110nm MirrorBit devices. Quarter-over-quarter, sales in Europe and the Americas increased and unit volume shipments were up twelve percent. Additional Highlights of the Quarter -- AMD shipped true Dual-Core technology with the AMD Athlon 64 X2 Dual-Core processors for desktop PCs and Dual-Core AMD Opteron processors for servers and workstations. Many of AMD's OEM customers announced Dual-Core systems, including Acer, HP, IBM, Lenovo, Sun, Supermicro Computer, Inc., Alienware, Cray, and Dawning. -- Several of the largest global OEMs broadened their AMD product offerings for small to mid-size businesses and enterprise markets, including: -- Sun Microsystems, Inc. introduced the Sun Ultra 20 Workstation and unveiled the Sun Fire V40z server, both powered by the Dual-Core AMD Opteron processor. Sun also announced that the versatile Solaris 10 Operating System supports servers based on the Dual-Core AMD Opteron processor. -- HP launched the HP ProLiant BL45p 4P blade server, the HP dx5150 Business Desktop, and the AMD Turion 64 processor-powered HP Compaq nx6125 laptop for small to mid-size businesses. -- IBM launched the AMD Opteron IBM LS20 2P blade server. -- Fujitsu Siemens Computers introduced a new line of professional PCs featuring the AMD Athlon 64 processor, the ESPRIMO P and ESPRIMO E series for business users. -- AMD, in conjunction with other industry partners, continued to deliver highly-differentiated, industry-first products, including: -- HP and AMD, working closely with the Lance Armstrong Foundation (LAF), developed the HP Special Edition L2000 "LIVESTRONG" notebook featuring the AMD Turion 64 processor. This one-of-a-kind consumer PC bears the LIVESTRONG message and a reproduction of Lance Armstrong's autograph. Fifty U.S. dollars from each HP Special Edition L2000 Notebook PC will go to the LAF to help it fund its public health, advocacy, research and education initiatives for people with cancer. -- Acer launched the AMD Turion 64 processor-powered Ferrari 4000, the world's first notebook to harness cutting-edge carbon fiber technology pioneered and perfected in the world of Formula One and in the aerospace industry. -- More than 75 of the top 100 companies in the Forbes Global 2000 or their subsidiaries have adopted AMD64 technology. Airbus, Alcatel, Computer Sciences Corporation, CyberTrader, Inc., a Charles Schwab company, The D.E. Shaw Group, Unilever, Vodafone and 7-Eleven, Inc. represent the growing ranks of enterprises using AMD technology. -- The AMD64 software ecosystem continued to gain momentum with Microsoft's release of Windows Server 2003 x64 Edition and Windows XP Professional x64 Editions, both developed in close collaboration with AMD. -- The Dual-Core AMD Opteron processor took "Best of TechEd 2005" honors conferred by Windows IT Pro and SQL Server Magazine at Microsoft TechEd 2005, and Network Magazine named the Dual-Core AMD Opteron processor "Breakthrough Product" for 2005 at the Network Magazine Innovation Awards. -- SAGEM announced the SAGEM myX-8 mobile phone using the Spansion S29GL512N Flash memory device - the industry's only single-chip 512Mbit NOR Flash memory device in production. Current Outlook -- AMD expects microprocessor sales growth to exceed normal seasonal patterns.