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Advanced Micro Devices’ (NYSE: AMD)
revenues of $1.18 billion beat Wall Street expectations of $1.13 billion, but
that wasn’t enough to quell disappointment that the company’s results were not
as impressive as its larger rival Intel’s, announced last week.

AMD revenue was flat sequentially and down
13 percent from the same period last year. AMD
reported a net loss of $330 million, compared with a net loss of $1.19 billion
during the same period last year and $416 million for the previous sequential

Looking ahead, AMD said that, given
macroeconomic conditions, limited visibility and historical seasonal patterns, it
expects revenue to be up slightly in Q3. But don’t expect Windows 7 revenue to
contribute significantly to the company’s coffers.

Dirk Meyer told analysts during a conference call following the earnings
announcement that while the company believes that Windows 7 is a strong
product, “We’re not modeling for our own purposes Win 7 being a huge
contributor to overall unit demand,” he said. “But I hope at the very least
there’s some ability for us and the industry, really, to upsell the richer,
more richly configured machines, particularly around the GPU [graphics
processing unit].”

AMD’s less optimistic outlook echoed the
difference between Intel’s and AMD’s
earnings conference call tones last quarter, too, as the larger chip maker
expressed confidence
that the PC market had bottomed out
, while AMD’s
CEO said he wondered
how anyone could think that the market had hit bottom

The difference may come from the one PC product that has proven recession-proof
this year—netbooks.

As one analyst pointed out during AMD’s
earnings call this week, while most technology vendors have skin in the netbook
game, or have been working to plan products for that space, AMD
had been silent in that area.

But Meyer told analysts not to count AMD out
quite yet.

“We’re aggressively working on more power-efficient and lower-cost components
purpose-built for lower price points in the marketplace like those associated
with netbooks,” Meyer said during the call. “We continue to see kind of a gap
between a netbook on the one hand and smartphones on the other. We’re clearly
targeting devices with reasonably useful keyboards and 10-inch screen sizes and
the continuum of PC-like devices above that independent of what operating
system happens to be loaded on those machines.”

Meyer added that AMD currently has no
plans to target the smartphone market.

AMD shares were trading down close to 13
percent the day following the earnings announcement.