DOW JONES NEWSWIRES 
 

Advanced Micro Devices Inc. (AMD) completed three straight years of losses in the third quarter, but the chip maker was profitable excluding impacts from its spun-off manufacturing operations, and sales topped expectations.

The semiconductor maker also it expected fourth-quarter revenue to be "up modestly" from the third quarter, echoing rosy outlooks earlier this week from rivals Intel Corp. (INTC) and Altera Corp. (ALTR). Analysts were expecting revenue of $1.36 billion, which is lower than the third quarter's sales.

Still, shares were down 2.8% to $6.02 in after-hours trading. The stock jumped nearly 75% since mid-August.

Chief Executive Dirk Meyer attributed AMD's $2 million core profit to "strong demand for our product and platform offerings combined with disciplined execution."

AMD, which makes chips used in personal computers, has struggled with stiffening competition with Intel and its own financial burdens, especially after its 2006 acquisition of ATI Technologies. AMD's manufacturing spinoff bolstered its cash position. Some analysts say AMD's new chips for portable notebooks and servers put it in a position to regain market share against Intel in 2010.

In the latest quarter, AMD reported a loss of $135 million, or 18 cents a share, compared with a prior-year loss of $127 million, or 22 cents a share. The latest results included a $66 million gain from the repurchase of debt.

Revenue dropped 22% to $1.4 billion.

Analysts' estimates were for 42-cent loss on revenue of $1.26 billion, according to a poll by Thomson Reuters.

Gross margin fell to 41.9% from 51% amid the sales woes.

Shipments of microprocessors and graphic processor units were flat, while the average selling prices of both types of chips were down from a year earlier.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com