Updated from 9:39 a.m. EST

Shares of Advanced Micro Devices ( AMD) were up slightly Wednesday even though the chipmaker detailed a disappointing fourth quarter and offered lukewarm projections for the seasonally weak first quarter stemming from increased competition in the flash memory market.

Shares were recently up 23 cents, or 1.5%, to $15.73.

After the bell Tuesday, AMD said it posted a fourth-quarter loss of $30 million, or 8 cents a share, on sales of $1.26 billion. During the same period last year, AMD earned $43.2 million, or 12 cents a share, on sales of $1.2 billion.

AMD's loss was largely driven by charges of $49 million, or 13 cents a share, caused by the conversion and retirement of debt. Following a warning from AMD on Jan. 10, analysts lowered their targets to reflect expected earnings excluding charges of 8 cents a share and sales of $1.26 billion, on average, according to Thomson First Call.

For the first quarter, AMD predicted that computer chip sales would be flat to down and that flash revenue would decline. The company expects to regain profitability in the current quarter.

During the fourth quarter, in its computational products group, AMD logged a double-digit percentage increase in unit shipments, with server and mobile chip sales hitting records for the company. Sales rose 26% from last year's fourth quarter. The flash memory group, however, held back results as the unit lost $39 million on sales of $504 million. Sales dropped 11% from last year's fourth quarter.

Executives at the company expressed frustration with the flash memory performance and vowed a renewed effort.

"The fourth quarter of 2004 was for AMD a solid quarter in microprocessors, but, frankly, a freaking dismal quarter in flash," said Chief Executive Hector Ruiz during a conference call. He cited aggressive pricing and oversupply, as well as poor execution for AMD in Japan and a delay in qualifying a new flash density.

"We will take bold actions to address these issues and to capitalize on the opportunities before us," Ruiz said. "We are determined to make this business provide a fair return to shareholders."

Analysts were skeptical of AMD's ability to bounce back so fast in the flash arena.

"AMD has little market power, and looks unlikely to have any control over profitability in the near future," said analyst Allan Mishan with CIBC World Markets in a research note, adding that he wasn't sure when the company's flash unit would be profitable again.

Still, others expect AMD's microprocessor unit to perform strongly going forward and that this should offset weakness in flash.

Analyst Kevin Rottinghaus with FTN Midwest Research expects AMD's overall profitability to improve through manufacturing and operational efficiencies, pricing increases in processors due to improving mix, and expanded exposure to more hardware manufacturers.

"Because of the improved product line-up, emerging opportunities in enterprise PCs, continued trend towards good-enough and lower cost PCs, and opportunities for additional share gains, we encourage investors looking for technology exposure to evaluate AMD as an opportunity to see appreciation in an emerging and maturing market," Rottinghaus wrote in a research note.

Ruiz vowed that AMD would do whatever it takes to make the flash business pay off for shareholders. He said he would accelerate technology transitions, better utilize capacity and "be more competitive and aggressive in the marketplace."

He also acknowledged the corporate reorganization around end-markets that its much larger and primary rival, Intel ( INTC), announced Monday.

"We believe that customers really would like to see all of us more focused on total solutions, whether you call it a platform or not. And I believe that doing that does make sense, makes sense for us and makes sense for the customer," Ruiz said.

However, Ruiz stopped short of saying that the way Intel was going about it was a good idea.

"I think the opportunity is for us to establish deeper and stronger relationships with the ecosystem to provide customers the best solution, not the solution we dream up in the lab and cram down their throats," he said during a conference call Tuesday.

Intel unveiled on Monday a marketing-driven reorganization that sets the company on a new path only four months before President Paul Otellini gets ready to take the chief executive reins. Intel made the move following the success of its Centrino brand of wireless networking technology.