The Sunnyvale, Calif.-based company reported a net loss of $128 million, or 18 cents per share, for the three months ended Sept. 26, compared with net loss of $134 million, or 22 cents per share, for the corresponding 2008 quarter.

Revenue slipped 22 percent from the year-ago period to $1.4 billion, from $1.8 billion, but improved sequentially from $1.2 billion.

In the latest quarter, AMD's net loss narrowly also partly because the company wrote recorded a "favorable impact of $53 million, or 8 cents per share, primarily from a $66 million gain from the repurchase of debt," the company said in a statement.

AMD said it benefitted in the latest quarter from rising demand for most of its products, including chipsets and graphics ICs.

"Strong demand for our product and platform offerings combined with disciplined execution resulted in AMD Product Company achieving profitability in the third quarter," said Dirk Meyer, AMD president and CEO, in a statement.

"Growth in microprocessor and graphics unit shipments drove an 18 percent sequential revenue increase, while improved factory utilization rates, higher microprocessor average selling price and an increase in 45nm product shipments resulted in a gross margin improvement from the prior quarter," added Meyer.

AMD said it sees fourth quarter revenue rising "modestly" from the preceding quarter.

The company's gross profit margin for the third quarter improved to 42 percent from 37 percent in the second quarter but fell sharply from 51 percent in the year-ago quarter.

The company's marketing, general and administrative expenses dropped to $221 million in the quarter from $315 million in the second quarter of 2008.