UPDATE 2-AMD expects key business to be profitable in 2010

* AMD sees core business profitable in 2010

* Says servicing debt remains a top priority

* Expects to be a cash flow "machine"

* Shares rise 3.5 percent to $5.32 (Adds details on margins and growth, comments on Intel, and background; byline)

By Ian Sherr

SUNNYVALE, Calif., Nov 11 (Reuters) - Advanced Micro Devices (AMD.N) said it expects to report profits next year from its chip design business, the backbone of a company trying rebuild market share and better compete with rival Intel Corp. (INTC.O).

AMD executives spent much of a meeting with analysts and investors on Wednesday emphasizing the company's efforts to remake itself as profitable chip designer, while addressing worries over the heavy debt it has accumulated in doing so.

AMD's debt rose to roughly $3.9 billion last year, but dropped to $3.2 billion as of the end of the third quarter, according to Thomson Reuters I/B/E/S.

UBS said in a recent note that AMD has $1.9 billion coming due in 2012.