AMD has beaten analyst estimates by making $134 million in pre-tax profit on revenue of $1.33 billion for its third-quarter, adding to the pressure on rival Intel.

"The AMD growth story continues," said Hector Ruiz, AMD's chief exec. The company's latest results are an improvement on both a year ago and the last quarter. When memory products sales are excluded, AMD's sales grew nine percent from the previous quarter and 32 percent from the previous year, said CFO Robert Rivet.

However, AMD's operating margins slipped to 51.4 percent from 56.8 last quarter and 55.4 percent a year ago. AMD attributes the decline to lower average selling prices for processors used in desktop computers.

AMD has been taking market share away from rival Intel in the last year with new dual-core processors, forcing Intel into a defensive posture. The margin slip is evidence of a price battle with Intel. AMD grew its share of the market for x86-based servers by 133 percent to 25.9 percent in the second quarter of 2006, according to Mercury Research.

Sales revenue for AMD microprocessors used in desktop computers was relatively flat in the third quarter compared to the second, Ruiz said, while revenue and unit sales volume rose by about 50 percent for laptops. Server sales grew, as well, he said, but only by single digits.

AMD forecasts that growth in fourth quarter sales will be driven, in part, by its $5.4 billion merger with Canadian graphics chip vendor ATI Technologies, which is expected to be completed next week. AMD sees the merger as a way to offer integrated products for the mobile computing and consumer electronics markets.