Bolaji Ojo Courtesy of EE Times (01/18/2008 1:59 PM EST)

Advanced Micro Devices Inc. is the new Golden Boy. It lost a ton of money on special charges in the fourth quarter, does not expect to be profitable until the second half of this year and continues to act coy about disclosing details of its new asset-smart manufacturing strategy.

If these were negatives points, they didn't matter during AMD's conference call on Thursday (Jan. 17) as analysts tripped over themselves to commend the microprocessor supplier for "a great quarter; an almost breakeven quarter; on moving towards profit and profitability and; on the margin progress."

Investors who had only a few days ago driven down AMD's stock price to a new 52-week low also gave the company a big thumbs up, pushing up its shares in after-hours trading after the release of its results.

The lovefest continued Friday. By midday, AMD shares had risen more than 12 percent and were holding on to the gains even as the main market indices began to wobble as investors digested unrelated but unpleasant macroeconomic news.

AMD archrival Intel Corp. did not receive such an overwhelmingly positive response when it on Tuesday (Jan. 16) announced solid fourth quarter results that showed strong revenue and profit gains.

What did AMD do right this time? First, the company showed the first signs it can move beyond talking about its hopes to become profitable to actually achieving a milestone that has eluded it for more than five quarters.

Beyond that, however, the company managed to erase the impression that it could become seriously cash-strapped, running into a liquidity crisis that may hobble operations and prevent it from competing effectively in the market, according to analysts.

AMD's cash position improved, for instance, to $1.89 billion by the end of the fourth quarter, from $1.53 billion in the September 2007 quarter.

Robert Rivet, chief financial officer of AMD, said the company's cash flow from operations nearly doubled during the recently ended quarter from the preceding three-month period.

"We are pleased with our progress improving working capital metrics," Rivet said during the conference call.

Analysts agreed that this development combined with a 3-percentage point sequential increase in gross profit margins, improved the company's position and makes its stock more attractive to investors.

"We believe the only reason not to own AMD shares at current levels is the fear of a liquidity crunch, which we view as a low-probability scenario given the current $1.8 billion cash balance and possible levels of cash via asset smart [fab] sales of non-core businesses [consumer] and the possible sale of part of ATI," the graphics chip specialist, Doug Freeman, an analyst with American Technology Research, said in a report.

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