AMD has reported its Q3 results and there's room for optimism, as it incurred a narrower net loss than the market expected.

Although the chipmaker was in trouble even before the recession kicked in, it is now showing some signs of recovery. Its Q3 net loss was $135 million, a slight increase from $127 in Q3 2008, but still somewhat lower than expected. During the same perion last year, AMD reported a revenue of $1.8 billion and this year it managed $1.4 billion.

In a conference call AMD CEO Dirk Meyer stressed that he was pleased with the results. He praised AMD's graphics division, saying demand for ATI chips was strong both in the desktop and mobile market. Meyer expects the industry to rebound in 2010.

The numbers don't tell the whole story. Last year AMD had next to no processors to compete with Intel in the highest grossing market segments and it was competing with Nvidia on equal terms. The introduction of new 45nm CPUs and successful graphics chips has done a lot to change the market perception of AMD and turn things around.

Although it still can't match Intel in the high end and mobile market, it can hold its ground against Intel's mid range and value products. The situation is even better for its graphics business, as ATI has managed pull away from Nvidia and grab quite a bit of market share.