Advanced Micro Devices Inc. returned to profitability in the first quarter as the world's No. 2 microprocessor maker benefited from a strengthening computer market.
The company also got a lift from an accounting boost related to the manufacturing division it spun off last year. But more importantly, the quarter's numbers suggest that AMD is being helped by broad trends that could lift many kinds of technology suppliers.
This week AMD's main rival in the business of selling the chips that are the "brains" of computers, Intel Corp., said that its first-quarter profit nearly quadrupled. It said consumer demand for laptops and corporate spending on computer servers were strong. Market research firms IDC and Gartner Inc. said personal computer shipments jumped more than 20 percent in the first quarter, which was more than expected.
AMD's CEO, Dirk Meyer, described spending on servers as "pretty healthy" and said on a conference call with analysts that he's optimistic the trend will hold through the rest of the year. However, he wouldn't discuss his projections for corporate spending on personal computers, an area that has been slow to recover.
AMD said after the market closed Thursday that it earned $257 million, or 35 cents per share in the first quarter. In the same period last year AMD lost $416 million, or 66 cents per share.
Excluding the gain from the manufacturing spinoff, AMD would have earned 9 cents per share in the most recent quarter.
Analysts polled by Thomson Reuters expected AMD to lose 3 cents per share. That number doesn't compare directly to AMD's results because some analysts included the spinoff in their forecasts, while others didn't.
AMD's revenue jumped 34 percent to $1.57 billion. Analysts were expecting $1.54 billion. Those numbers do compare directly.
The company predicted that revenue would decline from the first to second quarter, in line with seasonal trends. Analysts were predicting $1.53 billion in revenue for the second quarter.
The latest results mark the first time AMD isn't counting numbers from its manufacturing division, which were spun off into a company called GlobalFoundries Inc. in 2009. Until now, AMD had included those numbers within its own results.
The change is helpful for Wall Street analysts to measure whether AMD is prospering in its new strategy of focusing solely on designing chips instead of making them as well. The spinoff was done to help rescue AMD from mounting losses by cutting costs and unloading debt.
Still, AMD still owns about 30 percent of the spinoff and has to account for the investment in its results. In the latest period, AMD recorded a $325 million one-time, non-cash gain for changes in how that investment is valued.
AMD shares fell 49 cents, or 4.8 percent, to $9.65 in extended trading, after the results were announced. The shares had risen 27 cents, or 2.7 percent, to close the regular trading session at $10.16.
One surprise in Intel's first-quarter report on Tuesday was that companies are starting to replace their workers' laptops with new computers. Many had been hanging on to older models to save money.
The change was an encouraging sign for the industry. But Intel's CEO, Paul Otellini, cautioned that many companies are buying computers with older chips inside them because they're cheaper than maintaining aging machines. Older chips are generally less profitable for Intel and AMD.
© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.