Key questions and answers from the third quarter earnings call conducted by Advanced Micro Devices Inc. on October 18, 2007.

Krishna Shankar (JMP Securities): Any comments on the server business and the outlook for growth?

Dirk Meyer: We shipped tens of thousands of quad-core Opterons in the third quarter. That did not have a material contribution to the overall server business though. We expected to ship hundreds of thousands of quad-core CPUs in both server and desktop in the fourth quarter and we will increase the number of quad-core server processors shipped.

Chris Danely (JP Morgan): What milestones do you need to hit to become profitable?

Bob Rivet: Our goal is to make money in any given quarter, we needed to be approaching the $2 billion revenue level and north of 40% gross margin to achieve that goal since we are not going to cut our way to make the bottom line happen.

Chris Danely (JP Morgan): When do you expect to start shipping either at 2.4GHz or 2.5GHz Barcelona?

Dirk Meyer: We expect to ship the 2.5GHz product in the middle of this quarter.

JoAnne Feeney (FTN Midwest): Could you describe your ASPs by desktop and notebook?

Bob Rivet: In the client space, whether it was in the notebook or desktop, we saw improvement in ASP in both categories. A slight decline in the server space, but it drove the overall up.

JoAnne Feeney (FTN Midwest): In the notebook space, was the price competition confined to the consumer space?

Bob Rivet: That is the place we mostly play in. We continue to try to expand in the commercial space, but our notebook offering sits in the consumer space.

JoAnne Feeney (FTN Midwest): Are you seeing any evidence of double booking going into the fourth quarter?

Bob Rivet: Not at all. The indications from the current quarter were a lot of sellthrough, particularly in the distribution channel. We're at a very low level of weeks of inventory and the signals we continue to get from OEMs is very bullish and strong that units are moving quickly.

JoAnne Feeney (FTN Midwest): On the graphics side, do you are you getting more traction in the mainstream, and do you think you can break in at the high-end enthusiast segment?

Dirk Meyer: We feel good about the graphics business, based on good OEM design win momentum, a lot of which turns into business late this year and much of it next year. A lot of the business that we did was in the channel where the response has been strong. Based on the upcoming release of the RV 670, we are bullish about being able to participate in a bigger and more profitable piece of the business.

Tim Luke (Lehman Brothers): How do you see you inventory levels developing going forward?

Bob Rivet: It is hard to imagine with the seasonal strength of the fourth quarter that inventories won't decline. Inventories should drain in the fourth quarter.

Doug Freedman (Am Tech Research): Can you explain the charges related to severance and asset impairment?

Bob Rivet: We have had a multiple-prong attack to address integration issues, integration opportunities where we had redundancy in different categories where we needed to eliminate those resources. In addition, we had to step up and deal with people who were not doing as well as we thought they should.

The asset impairment of $42 million reflects the value of the Spansion stock which has been more permanently impaired since it has been sitting around $8 for a long period of time, which was more than our current book value when we wrote it down to the appropriate level and took the non-cash charge in the quarter.