* Revenue outlook impresses investors
* Non-GAAP EPS 9 cents
* Shares jump after-hours (Adds details from call, CEO search))
By Noel Randewich
SAN FRANCISCO, July 21 Advanced Micro Devices Inc AMD.N forecast that its revenue will rise faster than Wall Street expected and that its margins will increase, helping its shares to a 6 percent after-hours rally.
The company, a distant second to Intel Corp (INTC.O) in the business of computer microprocessors, also told investors that finding a CEO is a top priority and that it had interviewed several high-quality candidates, but would not be rushed.
AMD stock rose nearly 6 percent to $6.87 after it said revenue would rise between 8 percent and 12 percent in the third quarter compared with the prior quarter. Wall Street had on average expected a sequential gain of 8 percent.
"They're guiding ahead of Intel for the third quarter. That's largely a function of anticipated share gains," said Evercore Partners analyst Patrick Wang. "They clearly feel confident about where they are technologically. It comes down to execution and supply."
AMD also said its gross margins would increase 1 percentage point in the third quarter from 46 percent in the second quarter.
AMD has been under the temporary stewardship of Tom Seifert since its board ousted Dirk Meyer more than half a year ago, after they disagreed over the chipmaker's strategy to establish a footprint in a booming market for mobile devices.
"Meeting a timeline is not the driving force for the search: finding the right candidate is," general counsel Harry Wolin told analysts on a conference call.
AMD is betting that recently launched processors with added graphics horsepower will make it more competitive against Intel.
But much of the market share AMD is battling over is in low-end netbooks -- endangered by Apple Inc's (AAPL.O) iPad and other tablets.
Along with a slow economy, exploding sales of the iPad and smartphones are taking some wind out of demand for PC sales.
On Wednesday, Intel trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets, although its revenue outlook beat estimates. [ID:nN1E76I25R]
Investors have punished the shares of AMD this year because it has yet to stake out significant territory in the mobile market and due to its lack of a permanent CEO.
AMD's board abruptly removed Meyer in January because of concerns he had not targeted tablet computers and smartphones.
The company's revenue in the June quarter was $1.57 billion, down 5 percent from the year-ago period.
Analysts expected revenue of $1.58 billion for the second quarter and $1.70 billion for the current quarter, according to Thomson Reuters I/B/E/S, about an 8 percent increase.
Non-GAAP net income in the quarter was $70 million, down from $83 million in the year-ago period. Non-GAAP earnings per share were 9 cents. Analysts on average expected 8 cents. (Reporting by Noel Randewich; editing by Andre Grenon, Gary Hill)