This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Advanced Micro Devices Inc. (AMD: chart) on January 23, 2007.

Key Investors Issues

- Revenue rose 31% to $1.77 billion from $1.36 billion in the prior year.
- Net loss was $527 million or $1.08 a share, from a profit of $134 million or 27 cents in the prior year.
- The acquisition of ATI closed on October 24, joining two industry leading technology companies to create a processing powerhouse.

Full Year Highlights:

- Revenues dropped 3.4% from $5.85 billion in 2005 to $5.65 billion.
- Net loss was $166 million or 34 cents a share, from a profit of $165 million or 41 cents a share.
- Cash and cash equivalents amounted to $1.54 billion.

Fourth Quarter Highlights

Revenue was $1.77 billion including approximately $50 million in royalty and patent license revenue, up 31% from $1.36 billion in 2005.

- The firm realised a loss of $527 million or $1.08 a share, from a profit of $134 million or 27 cents in the prior year, including $550 million or $1.04 per share from ATI acquisition related and integration charges.
- Gross margin was 40%, excluding ARC charges and stock based compensation expense compared to 52% in the prior period with the decrease largely due to significantly lower server processor ASPs and the inclusion of ATI operations.

Segment Highlights:

- Computation Products revenue was $1.34 billion, up 3% from the prior quarter as mobile and desktop processor sales were strong.
- Mobile unit shipments and revenue increased 41% while desktop processor unit shipments increased 14% and revenue 8%.
- The drop in desktop ASPs were driven primarily by a shift in customer mix.
- Server processor unit shipments were essentially flat quarter-over-quarter and ASPs declined significantly.
- Operating income was $73 million.

For the former ATI operation segments, revenue totaled $398 million at the high end of the previous guidance.

- Revenue in the Graphics and Chipsets segment was $278 million with an operating loss of $33 million.
- The Consumer Electronics segment achieved revenue of $120 million and an operating income of $20 million.

After completing the acquisition of ATI through a combination of cash, debt and stock, the firm ended with a cash balance of $1.5 billion.

- Debt of $3.8 billion includes $2.2 billion associated with the ATI acquisition.
- Inventory of $814 million includes $314 million from former ATI operations.
- Inventory for the historical AMD business increased $34 million as the firm continues to ramp Fab 36, 65-nanometer products.
- Capital expenditures amounted to $668 million.

Strategic Successes:

- Compared to 2005, the firm grew the annual processor unit shipments 135% in the server business, 78% in the mobile business and 35% overall.
- The firm made good progress in its customer acquisition strategy as Greater China, Founder and Tongfang chose to became AMD customers and Lenovo expanded their business with the firm.
- IBM expanded their AMD-based platform portfolio while HP broadened their business with the firm and Dell began shipping AMD-based server, desktop and mobile products.

The firm has technology leadership in key product areas; x86 CPUs and associated chipsets, graphics and video processing.

- It also has world-class manufacturing capability and a flex-fab strategy designed to serve the desires of customers as well as shareholders.
- New opportunities include the improved x86 architecture and the family of products which it is based such as Barcelona, quad-core offering in the server space will introduce new levels of performance and power efficiency.

The GPU technology provides the ultimate Vista experience today and the R600 family, the next-generation graphics engine will delight customers and end users worldwide.

- On the supply side, the firm will continue to ramp capacity by building out assets like Fab36 and by converting Fab30 to 300 millimeter toolset.
- AMD plans to complete the conversion to 65-nanometer technology this year and lay the groundwork for a transition to 45-nanometer in the first half of next year.