AMD shares rise on bullish Nvidia comments

SAN FRANCISCO (Reuters) - Shares of Advanced Micro Devices Inc. (AMD.N) rose 3.6 percent on Friday, boosted by remarks from graphics chip company Nvidia Corp. (NVDA.O) that chipset sales for AMD-based computers would start growing again this quarter.

"Nvidia was saying last night that AMD channel inventories were clearing," said Doug Freedman, an analyst with American Technology Research. "So they are expecting a snapback in share gains from AMD."

Nvidia, which makes graphics processors and chipsets that compete with those from AMD's ATI unit, said on Thursday that first-quarter chipset sales sank 31 percent from the previous quarter but it expected that segment to resume growth in the current quarter.

AMD shares have risen more than 7 percent this week, including a gain of 4.4 percent on Thursday after the No. 2 maker of computer processors said it had cut 430 jobs in an effort to trim costs. On Friday afternoon, the stock was up 51 cents to $14.56.

Nvidia shares were up 7.3 percent or $2.38 to $35.20 on Friday afternoon.

"All sites asked to find ways to cut costs, and head count reductions were one way to do that," AMD spokesman Mike Silverman said.

AMD did not say how much it expected to save as a result of the cuts, but Freedman said the move could reduce operating expenses by $40 million a year and add 8 cents per share to the company's bottom line.

However, AMD still faces stiff competition from its resurgent rival, Intel Corp. (INTC.O), and Freedman lowered his full-year estimate on AMD results to a loss of $2.56 per share from a loss of $2.41 per share.