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AMD Reports Second Quarter Results
SUNNYVALE, Calif., Jul 17, 2008 (BUSINESS WIRE) -- 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 operations(1) 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) 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

This release contains forward-looking statements concerning revenue for the third quarter of 2008, operating profitability for the second half of 2008, restructuring programs, and the intended divestiture of AMD's Handheld and DTV product businesses, which are 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; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the third quarter of 2008 and beyond; the company's cost containment efforts will not be effective; customers stop buying the company's products or materially reduce their 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; demand for computers and consumer electronics products and, in turn, demand for the company's products will be lower than currently expected; 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; the company will be unable to divest its Handheld or DTV product businesses in the expected timeframe, if at all, or in a manner contemplated by the company; 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 March 29, 2008.

AMD, the AMD Arrow logo, AMD Opteron, AMD Phenom and combinations thereof, and ATI, the ATI logo, FireGL 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.

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


                        Quarter Ended              Six Months Ended
----------------------------------------------- ----------------------
               June 28,   Mar. 29,   June 30,    June 28,   June 30,
                 2008       2008       2007        2008       2007
              (Unaudited)(Unaudited)(Unaudited) (Unaudited)(Unaudited)
----------------------------------------------- ----------------------

Net revenue   $    1,349 $    1,456 $    1,309  $    2,805 $    2,439

Cost of sales        653        852        870       1,505      1,685

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

Gross margin         696        604        439       1,300        754

Gross margin %        52%        41%        34%         46%        31%

Research and
 development         442        455        438         897        830

Marketing,
 general and
 admini-
strative             337        334        356         671        683

Amortization
 of acquired
 intangible
 assets and
 integration
 charges              30         29         41          59         88

Restructuring
 charges              30          -          -          30          -

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

Operating
 income (loss)      (143)      (214)      (396)       (357)      (847)

Interest
 income               10         15         19          25         35
Interest
 expense             (95)       (95)       (99)       (190)      (177)
Other income
 (expense),
 net                 (10)        (1)        (9)        (11)        (7)

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

Income (loss)
 from
 continuing
 operations
 before
 minority
 interest,
 equity in net
 loss of
 Spansion Inc.
 and other and
 income taxes       (238)      (295)      (485)       (533)      (996)

Minority
 interest in
 consolidated
 subsidiaries         (7)       (13)        (9)        (20)       (17)

Equity in net
 loss of
 Spansion Inc.
 and other           (24)         -        (13)        (24)       (29)

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

Income (loss)
 from
 continuing
 operations
 before income
 taxes              (269)      (308)      (507)       (577)    (1,042)

Provision
 (benefit) for
 income taxes          -          -         24           -         39

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

Income (loss)
 from
 continuing
 operations   $     (269)$     (308)$     (531) $     (577)$   (1,081)

Income (loss)
 from
 discontinued
 operations,
 net of tax         (920)       (50)       (69)       (970)      (130)
----------------------------------------------- ----------------------

Net income
 (loss)       $   (1,189)$     (358)$     (600) $   (1,547)$   (1,211)

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

Net income
 (loss) per
 common share

Basic and
 Diluted:
Continuing
 operations   $    (0.44)$    (0.51)$    (0.96) $    (0.95)$    (1.97)
Discontinued
 operations   $    (1.52)$    (0.08)$    (0.13) $    (1.60)$    (0.24)
----------------------------------------------- ----------------------
Basic and
 diluted net
 income (loss)
 per common
 share        $    (1.96)$    (0.59)$    (1.09) $    (2.55)$    (2.20)

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

Shares used in
 per share
 calculation

Basic                607        606        552         606        550
Diluted              607        606        552         606        550

ADVANCED MICRO DEVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Millions)
                                                   June 28,   Dec. 29,
                                                     2008     2007(a)
                                                  (Unaudited)
----------------------------------------------------------------------

Assets

Current assets:
   Cash, cash equivalents and marketable
    securities                                    $    1,567  $ 1,889
   Accounts receivable, net                              437      588
   Inventories                                           791      802
   Prepaid expenses and other current assets             244      395
   Deferred income taxes                                  20       64
   Assets of discontinued operations                     372    1,323

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

        Total current assets                           3,431    5,061

Property, plant and equipment, net                     4,599    4,708
Goodwill                                                 945      950
Acquisition related intangible assets, net               253      311
Other assets                                             556      520

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

Total Assets                                      $    9,784  $11,550
======================================================================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable                               $      800  $   982
   Accrued compensation and benefits                     160      180
   Accrued liabilities                                   730      814
   Deferred income on shipments to distributors           80       98
   Current portion of long-term debt and capital
    lease obligations                                    246      238
   Other short-term obligations                           60        -
   Other current liabilities                             369      270
   Liabilities of discontinued operations                 23       43

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

        Total current liabilities                      2,468    2,625

Deferred income taxes                                      3        6
Long-term debt and capital lease obligations, less
 current portion                                       4,955    5,031
Other long-term liabilities                              695      633
Minority interest in consolidated subsidiaries           189      265

Stockholders' equity:
   Capital stock:
   Common stock, par value                                 6        6
   Capital in excess of par value                      5,962    5,921
   Retained earnings (deficit)                        (4,647)  (3,100)
   Accumulated other comprehensive income                153      163
----------------------------------------------------------------------

        Total stockholders' equity                     1,474    2,990

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

Total Liabilities and Stockholders' Equity        $    9,784  $11,550
======================================================================



(a)Amounts for the year ended December 29, 2007 were derived from the
    December 29, 2007 audited financial statements adjusted for
    discontinued operations.

ADVANCED MICRO DEVICES, INC.
SELECTED CORPORATE DATA (1)
(Unaudited)
(Millions except headcount and percentages)


                             Quarter Ended          Six Months Ended
----------------------------------------------------------------------
                      June 28,  Mar. 29,  June 30,  June 28, June 30,
Segment Information    2008      2008      2007      2008      2007
 from Continuing
 Operations
---------------------

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

Computing Solutions
 (2)
       Net revenue    $ 1,101   $ 1,194   $ 1,098   $ 2,295   $ 2,017
       Operating
        income
        (loss)        $    (9)  $  (164)  $  (269)  $  (173)  $  (600)

Graphics (3)
       Net revenue        248       262       211       510       422
       Operating
        income
        (loss)            (38)       13       (39)      (25)      (65)

All Other (4)
       Net revenue          -         -         -         -         -
       Operating
        income
        (loss)            (96)      (63)      (88)     (159)     (182)

Total from
 Continuing
 Operations
       Net revenue    $ 1,349   $ 1,456   $ 1,309   $ 2,805   $ 2,439
       Operating
        income
        (loss)        $  (143)  $  (214)  $  (396)  $  (357)  $  (847)


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

Revenue
 Reconciliation
--------------------

Revenue from
 continuing
 operations           $ 1,349   $ 1,456   $ 1,309   $ 2,805   $ 2,439
Revenue from
 discontinued
 operations                37        49        69        86       172
                      --------  --------  --------  --------  --------
       Total revenue  $ 1,386   $ 1,505   $ 1,378   $ 2,891   $ 2,611

Components of
 Discontinued
 Operations
--------------------

Operating loss        $   (42)  $   (50)  $   (69)  $   (92)  $  (130)
Impairment of
 goodwill and
 acquired intangible
 assets                  (876)        -         -      (876)        -
Restructuring
 charges                   (2)        -         -        (2)        -
                      --------  --------  --------  --------  --------
       Total loss
        from
        discontinued
        operations    $  (920)  $   (50)  $   (69)  $  (970)  $  (130)

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

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

Depreciation &
 amortization
       (excluding
        amortization
        of acquired
        intangible
        assets)       $   263   $   265   $   253   $   528   $   494

Capital additions     $   104   $   322   $   414   $   426   $ 1,000

Adjusted EBITDA (5)   $   119   $    81   $  (121)  $   200   $  (303)

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

Headcount              15,653    16,398    16,719    15,653    16,719
--------------------

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



(1)    Comparative amounts adjusted for discontinued operations except
        for headcount data.
(2)    Computing Solutions segment includes microprocessors, chipsets
        and embedded processors. For the quarter ended and six months
        ended June 28, 2008, the operating loss includes a $193M gain
        on the sale of 200 mm equipment.
(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. Starting in the quarter ended June 28, 2008 this
        segment also includes royalties received in connection with
        the sale of game console systems that incorporate the
        Company's graphics technology. Prior periods have been recast.
(4)    All Other category includes employee stock-based compensation
        expense and certain operating expenses and credits that are
        not allocated to the operating segments. Also included in this
        category are the restructuring, severance and ATI acquisition-
        related charges. Details of the restructuring, severance and
        ATI acquisition-related charges and employee stock-based
        compensation expense are shown below.

  Restructuring, severance, and ATI acquisition-related charges:
                                     Quarter Ended   Six Months Ended
                                     Q208 Q108 Q207    Q208     Q207
                                     --------------- ----------------
  Restructuring charges              $30  $ -  $ -        $30  $  -
  Severance charges                    -    -   16          -    16
                                     --------------  ----------------
  Subtotal                           $30  $ -  $16        $30  $ 16

  Amortization of acquired intangible
   assets                             30   29   34         59    68
  Integration charges                  -    -    7          -    20
                                     --------------  ----------------
  Total amortization of acquired
   intangibles and integration
   charges                           $30  $29  $41        $59  $ 88
  Cost of fair value adjustment of
   acquired inventory                  -    -    -          -    18
                                     --------------  ----------------
  ATI acquisition-related charges    $30  $29  $41        $59  $106
                                     --------------  ----------------
  Restructuring, severance, and ATI
   acquisition-related charges       $60  $29  $57        $89  $122
                                     ==============  ================


  Employee stock-based compensation expense:
                                      Quarter Ended  Six Months Ended
                                      Q208 Q108 Q207    Q208     Q207
                                      -------------- ----------------
  Cost of sales                        $ 3  $ 3  $ 2         $ 6  $ 5
  Research and development               8   15   13          23   26
  Marketing, general and
   administrative                        6    2   14           8   25
                                      -------------- ----------------
                                       $17  $20  $29         $37  $56
                                      ============== ================








    Reconciliation of income (loss) from continuing operations to
(5)  Adjusted EBITDA(a)
                    Quarter Ended      Six Months Ended
                  Q208   Q108   Q207    Q208    Q207
                 ------ ------ ------  ------ --------
    Income (loss)
     from
     continuing
     operations  $(269) $(308) $(531)  $(577) $(1,081)
    Depreciation
     and
     amortization  263    265    253     528      494
    Amortization
     of acquired
     intangible
     assets         30     29     34      59       68
    Interest
     expense        95     95     99     190      177
    Provision
     (benefit)
     for income
     taxes           -      -     24       -       39
    ------------------- ------ ------  ------ --------
    Adjusted
     EBITDA      $ 119  $  81  $(121)  $ 200  $  (303)
                 ====== ====== ======  ====== ========


(a)The Company defines Adjusted EBITDA as income (loss) from
    continuing operations adjusted for depreciation and amortization,
    amortization of acquired intangible assets, interest expense and
    taxes. The Company calculates and communicates 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, Inc.

AMD
Drew Prairie, 512-602-4425 (Editorial Contact)
drew.prairie@amd.com
Ruth Cotter, 408-749-3887 (Investor Contact)
ruth.cotter@amd.com