Updated from 6:57 p.m. EST

Advanced Micro Devices

(AMD) - Get Report

outdid last month's promise, turning in $952 million in revenue for the fourth quarter, a breathtaking 24% sequential increase. The chipmaker's results involved a loss of 5 cents a share, and trounced Wall Street's expectations of $860 million in revenue and a loss of 18 cents a share.

Yet AMD's results stopped 21% short of the year-ago quarter's $1.18 billion in holiday sales. In the fourth quarter of 2000, AMD reaped 53 cents a share in profit. Its latest figures, while well above analyst hopes, amounted to a 110% falloff in earnings year over year. AMD plans to turn a profit in the second quarter of 2002.

The company forecast $900 million in first-quarter revenue as part of a seasonal decline. AMD CEO Jerry Sanders outlined a flat first half of 2002, followed by 20% growth in the latter part of the year, "setting the stage for an industry barnburner in 2003." Sanders predicts that AMD's average selling prices in 2002 will remain steady with the fourth quarter's $90 mark, after a year of brutal price cuts in 2001. AMD also expects its volume of chip shipments to be flat in the first quarter.

AMD joined

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Intel

(INTC) - Get Report

in raising revenue expectations on Dec. 6 for the fourth quarter. The stiff competitors both saw a pickup in PC sales, which AMD said would translate to a 10% sequential increase in revenue from the third quarter's $766 million, or about $843 million. Intel finished with a 7% climb from third- to fourth-quarter revenue.

Keep in mind that in the third quarter, AMD's memory business and average selling prices contributed to two warning announcements, a 22% sequential revenue decline and a 36% year-over-year fall in revenue.

In the fourth quarter, however, the joys of the holiday season seemed to return. AMD boasted of a 4% year-over-year increase in microprocessor shipments in an environment slim on positive year-over-year comparisons. The chipmaker shipped 7.8 million processors and claimed its chips captured 20% of the market in the fourth quarter, excluding chips that went into non-PC devices such as the Xbox game console.

AMD shares dropped more than 6% in Wednesday trading to $17.91. Through Tuesday's close, the chip upstart's shares had gained 140% since the beginning of October.

Flash memory, of course, was another story, as revenue declined 7% sequentially in the unit. AMD tempered previous forecasts in its midquarter revenue surprise announcement. While it had guided for flat to 10% growth in its flash memory business, by December, AMD had seen enough to think its flash revenue would remain flat with the third quarter's $210 million in sales. The chipmaker's memory revenue fell 34% from the second quarter of 2001 to the third quarter, and AMD anticipates that memory revenue will erode again in the first quarter.