Advanced Micro Devices Inc. reported that its first profit in 13 quarters, after sales climbed and Intel Corp. paid about $1.25 billion to settle a lawsuit.

AMD shares, which have nearly quadrupled in the past year, fell 3.2%, to $8.70 in after-hours trading, though the chip maker's performance were better than Wall Street expected.

In addition, revenue climbed to 42 percent to $1.65 billion, AMD claimed in a statement. However, analysts had speculated $1.5 billion, according to a Bloomberg survey.

Fourth-quarter net income attributable to AMD common shareholders was $1.18 billion, or $1.68 a share, compared with a loss the previous year.

Both AMD and Intel, the two biggest makers of personal-computer processors, fetched profits from the better-than-expected orders for PCs last quarter as holiday shoppers snapped up notebook machines.

“All the numbers are good, but the stock has doubled in the last 10 weeks”, said Freedman, who suggests this is the right time for buying the shares. “Some people believe that this PC cycle is peaking. I don’t know what the management can say to change that”.

AMD targets to turn around its finances after the 2006 acquisition of ATI Technologies Inc. increased debt. In order to cut its spending requirements in an industry where new factories can cost more than $4 billion, AMD spun off its plants into a joint- venture with the government of Abu Dhabi.