Advanced Micro Devices (NYSE:AMD) reported earnings for the fourth quarter and full year after the close of the trading session on Wednesday. Everyone was eagerly awaiting these reports after Intel's (NASDAQ:INTC) recent scorecard, so let's see how they stack up.

For the fourth quarter, AMD saw a 45% rise in net sales, coming in at $1.84 billion. Operating income jumped an astonishing 930% to $206 million. Net income from a GAAP perspective was $96 million, or $0.21 per diluted share, which represented a nice reverse of the year-ago loss of $30 million, or $0.08 per diluted share.

There was a non-cash charge, which affected the net earnings picture for the quarter relating to the Spansion IPO, a joint venture with Fujitsu involving flash memory. Backing out this one-time charge, fourth-quarter net income came in at $205 million, or $0.45 per share. The results so far are impressive, but let's move on to the full-year report.

For all of 2005, AMD saw net sales rise 17% to $5.8 billion. Operating income increased 4% to $231.6 million, and net income appreciated by more than 80% to $165.5 million, or $0.40 per diluted share. AMD posted a solid year, especially from a top-line perspective. The cool thing about this coming year is that Motley Fool Inside Value pick Microsoft (NASDAQ:MSFT) is set to launch its new operating system upgrade, dubbed Vista. In a previous article on Intel, I observed that the upgrade could indeed be a nice catalyst for chip makers, since consumers should be enticed to upgrade their old machines with an operating system that is supposed to be -- if you believe the marketing -- a true innovation over the MEs and XPs we've had to deal with for the past several years. I also mentioned the potential for a lot of IT spending to occur this year. Taking those two issues into account, I'd say AMD, as well as Intel, has a lot to look forward to.

But would I necessarily buy AMD at this price level? No. According to the key stats, AMD has a trailing P/E right over 90 using 2005 GAAP earnings in the denominator. Even after generously using the company's pro forma earnings, the trailing P/E is a lofty 55. High P/E ratios aren't always bad, but with most analysts projecting about 15% growth per annum, they do seem a bit rich.

If you want exposure to this company as a play on the chip sector, I'd wait for a pullback, because AMD is already up by more than 10% as of this writing on Thursday. AMD is certainly doing well, but it's always Foolish to be cognizant of getting in at a good price.

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Fool contributor Steven Mallas owns none of the companies mentioned. The Fool has a disclosure policy.