SAN FRANCISCO -- Advanced Micro Devices ( AMD) did something it hasn't done in a long time: It proved Wall Street wrong.

While many analysts and investors had left AMD for dead, the chipmaker demonstrated that it was still alive and relevant -- customers are still buying its chips.

AMD delivered solid sales growth across all its product lines in the third quarter, increasing its revenue 15% sequentially, nearly twice the clip that Intel's ( INTC) sales increased (although AMD had the benefit of an easier comparison).

AMD also significantly boosted its gross profit margin and trimmed its operating expenses.

All told, AMD's third-quarter performance was an impressive showing for a company that has spent the past year defining dysfunctional, and a nice start for Dirk Meyer in his official role as CEO.

Shares of AMD, which are down almost 70% from their 52-week high, were up more than 9% to $4.50 in midday trading Friday.

Don't mistake AMD's third quarter for a comeback, though. It's more akin to a team scoring a few points in the closing minutes of a game it had already lost.

The new game kicks off in the current quarter, as Intel and AMD each release new server microprocessors. AMD will also compete in the latest contest as a radically different entity, once it sheds its manufacturing factories early next year in its so-called "asset smart" makeover.

And then, of course, there's the potential of a global economic recession, which could hurt everyone. Like just about every chipmaker in recent weeks including Intel, Fairchild Semiconductor ( FCS) and Altera ( ALTR), AMD offered a downbeat forecast for the fourth quarter, projecting that sales will remain flat sequentially.

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