Thursday, October 16th 2014

AMD Reports 2014 Third Quarter Results

AMD today announced revenue for the third quarter of 2014 of $1.43 billion, operating income of $63 million and net income of $17 million, or $0.02 per share. Non-GAAP operating income was $66 million and non-GAAP net income was $20 million, or $0.03 per share.

"AMD's third quarter financial performance reflects progess in diversifying our business," said Dr. Lisa Su, AMD president and CEO. "Our Enterprise, Embedded and Semi-Custom segment results were strong; however, performance in our Computing and Graphics segment was mixed based on challenging market conditions that require us to take further steps to evolve and strengthen the financial performance of this business. Our top priority is to deliver leadership technologies and products as we continue to transform AMD."
Effective July 1, 2014, AMD reorganized into two business groups, one focused on the traditional PC market and the second focused on adjacent high-growth opportunities.
Accordingly, AMD has two reportable segments:
  • Computing and Graphics, which primarily includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics; and
  • Enterprise, Embedded and Semi-Custom, which primarily includes server and embedded processors, dense servers, semi-custom SoC products, engineering services and royalties.
Quarterly Financial Summary
  • Gross margin was 35 percent in Q3 2014.
    Gross margin was flat sequentially and included a $27 million, or 2 percent benefit, from revenue related to technology licensing.
  • Cash, cash equivalents and marketable securities were $938 million at the end of the quarter, essentially flat from the prior quarter.
  • Total debt at the end of the quarter was $2.20 billion.
  • Computing and Graphics segment revenue decreased 6 percent sequentially and decreased 16 percent year-over-year. The sequential decrease was primarily driven by lower chipset and GPU sales. The year-over-year decline was primarily due to decreased notebook processor and chipset sales.
    Operating loss was $17 million, compared with an operating loss of $6 million in Q2 2014 and operating income of $9 million in Q3 2013. The sequential decrease was primarily driven by lower revenue while the year-over-year decrease was primarily driven by lower revenue partially offset by lower operating expenses.
    Client average selling price (ASP) increased sequentially and year-over-year primarily driven by a richer mix of notebook processor sales.
    GPU ASP decreased sequentially due to lower desktop GPU ASP and increased year-over-year.
  • Enterprise, Embedded and Semi-Custom segment revenue increased 6 percent sequentially and 21 percent year-over-year primarily driven by increased sales of semi-custom SoCs.
    Operating income was $108 million compared with $97 million in Q2 2014 and $92 million in Q3 2013. The sequential and year-over-year increase was primarily due to increased sales of semi-custom SoCs.
    Embedded revenue grew by double digits on a percentage basis sequentially.
Q4 2014 Restructuring and Transformation Initiatives
As a part of AMD's ongoing transformation work, the company has developed a targeted restructuring plan to better position AMD for profitability and long-term growth while aligning investments and resources with high-priority opportunities.
The restructuring plan, which will be largely implemented in Q4 2014, is expected to:
  • Reduce global headcount by 7 percent, largely expected to be completed by the end of Q4 2014;
  • Align AMD's real estate footprint with its reduced headcount;
  • Result in a restructuring and impairment charge of approximately $57 million in Q4 2014, primarily related to severance, and a restructuring charge of approximately $13 million in 1H 2015, primarily related to real estate actions;
  • The company expects to make cash payments related to these actions of approximately $34 million in Q4 2014 and $20 million in 1H 2015;
  • Result in operational savings, primarily in operating expenses, of approximately $9 million in Q4 2014 and approximately $85 million in 2015.
"While decisions that impact the size of our global team are never entered into lightly, this is the right step to ensure we prioritize our resources and engineering investments in our highest-priority opportunities that can drive improved profitability and long-term growth," said Dr. Su.

Recent Highlights
  • AMD appointed Dr. Lisa Su as president and CEO and a member of the board of directors, succeeding Mr. Rory Read who will remain with the company through 2014 to advise on the transition. Mr. Joseph Householder was also appointed to the company's board. Mr. Householder currently serves as executive vice president and chief financial officer of Sempra Energy.
  • AMD and Synopsys announced a multi-year agreement, with Synopsys acquiring rights to AMD's interface and foundation IP. The IP partnership will provide AMD with access to a range of Synopsys tools and IP for advanced FinFET process nodes.
  • AMD expanded its award-winning AMD Radeon R9 series graphics family with the launch of the AMD Radeon R9 285 graphics card designed to run the most demanding games at the highest settings.
  • AMD completed its most advanced APU lineup to-date for the component channel with the introduction of new AMD A-Series APUs with HSA features and GCN architecture for the system builder and DIY market, along with new APUs designed for smaller form factor gaming and home theater PC (HTPC) systems.
  • Demonstrating its leadership in building a robust software ecosystem for 64-bit ARM servers, AMD announced immediate availability of the AMD Opteron A1100-Series development kit, featuring AMD's first 64-bit ARM-based processor, and showcased the first public demonstration of Apache Hadoop running on an ARM Cortex-A57-based AMD Opteron A-Series processor. AMD is the first company to provide a standard ARM Cortex-A57-based server platform for software developers and integrators.
  • AMD expanded its AMD FirePro professional graphics offerings with the introduction of 4 new next-generation AMD FirePro W-series professional graphics cards that deliver at least 2x2 more graphics memory over the previous generation, multi-display 4K capability and increased compute performance. AMD secured several new design wins with tier-1 OEMs, including multiple HP mobile and desktop workstations. AMD also introduced the most powerful server GPU ever built for High Performance Computing with the AMD FirePro S91503.
  • Mentor Graphics announced the availability of commercial Embedded Linux software enabling developers to easily migrate to new commercially-supported versions for the AMD Embedded G-Series SoC and CPU, and the AMD Embedded R-Series APU.
  • AMD announced a new technology partnership with OCZ Storage Solutions, a Toshiba Group Company, for AMD Radeon-branded Solid State Drives (SSDs).
  • In collaboration with Canonical, AMD announced a ready-to-deploy OpenStack private cloud based on the SeaMicro SM15000 server. The "out of the box" experience is meant to ease the complexities of deploying OpenStack technology and automates complex configuration tasks, simplifies management, and provides a graphical user interface to dynamically deploy new services on demand.
  • Dow Jones named AMD to the Dow Jones Sustainability Index (DJSI) North America, marking more than a decade-long appearance on the list and exemplifying the company's legacy of corporate responsibility and commitment to social, economic and environmental issues.
Current Outlook
For Q4 2014, AMD expects revenue to decrease 13 percent, plus or minus 3 percent, sequentially.
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46 Comments on AMD Reports 2014 Third Quarter Results

#26
john_
Intel can't move the prices much higher because of the ARM platform. If the x86 platform becomes too expensive, people will turn to ARM. CPU performance today is more than enough for most people. Not everyone is encoding video in their free time, or manipulating dozens of photos every day passing them through heavy filters. Intel is giving away free chips to create a market share in the low end and they will have to keep the cash flow in the future to maintain that market share.

On the other hand Nvidia is much more greedy. We seen that with Titan Z, but if it becomes a monopoly in hi end graphics and starts having bigger incomes from Tegra, it will eventually go against Intel's x86 platform trying to create it's own proprietary gaming platform, which means more reasonable prices.
Posted on Reply
#27
jigar2speed
Looks like AMD should be done within 6 - 9 months... They are running out of cash and employees. They are also not being supported by the system builders like HP, Acer etc.

And lets not forget the fact that New Nvidia GTX 980 & 970 has simply stunned the crap out of current AMD GPUs.

I hope Dr. Su can spin this and make AMD once again a competitive company, but currently it is looking very very difficult job.
Posted on Reply
#28
Sony Xperia S
I guess the biggest problem is that they have nothing competitive in the works to counter Maxwell.

They are so late with 20 nm if ever jump on it. Was it Rory's decision not to go to new manufacturing processes first as soon as possible? Probably this is the reason why he's gone now.

Too many wrong managerial decisions and strategies.

16 nm is still at least a year away, so the clouds over their heads will only get heavier.
Posted on Reply
#29
jagd
Sorry but where at 20nm available to AMD atm ? Do you realise 20nm not available to amd/nvidia from TSMC or glofo atm .

AMD and nvdia are fabless chip makers and depending to TSMC and global foundries for fab process , they can only use what available and 20nm is not available at the moment.
Sony Xperia SThey are so late with 20 nm if ever jump on it. Was it Rory's decision not to go to new manufacturing processes first as soon as possible? Probably this is the reason why he's gone now.
Posted on Reply
#30
m0nt3
john_I guess the worst part was left for last. I bet GTX970 had something to do with this one.
I would say it has more to do with them not having a new product available for this holiday season. The R9 390X is still rumored for next year.
Posted on Reply
#31
Sony Xperia S
jagdDo you realise
I don't have to realise anything. I'm just stating finished facts and you argue for the reasons but they themselves don't change the outcome. ;)

TSMC and Global Foundries are not the only fabs in the world producing chips on cutting-edge technology. Neither is AMD supposed to look only for this as a solution for their lacking of efficient architectures.

Something happens with this world, like global progress freeze. Wondering what causes it and why?
Posted on Reply
#32
john_
m0nt3I would say it has more to do with them not having a new product available for this holiday season. The R9 390X is still rumored for next year.
What Nvidia did, redesign their architecture and optimize it as much as possible for the 28nm, AMD couldn't do it or choose not to do it. They didn't had the engineers, the time, the money, maybe all those, so they just did a few improvements in the current architecture to call it 285 and 285X until 20nm would come. Save millions of dollars in R&D, replace the 280 series with cheaper to manufacture 285s but sell them for more, then throw a watercooling on the biggest 295X model and sell it for even more than 290X. Nvidia never sells their top cards cheap anyway, right? Well 970 came at $330 and not $450 for example and AMD's strategy gone to the dustbin with 285X and maybe 295X, if there was any, canceled.
Posted on Reply
#33
RejZoR
People predicting death of AMD and they aren't even in the red numbers lmao...
Posted on Reply
#34
GhostRyder
the54thvoidYou have to question AMD business practices. For a company with the GPU chip in the only two modern gaming consoles and currently the best integrated gfx solution, how can their finances be so bad?
So they don't compete on HEDT but they do have a CPU solution and their GPU solutions have been competent, if not brilliant (5870, 7970, 290x). Being 2nd to Intel or Nvidia in performance doesn't need to mean a loss making business.
Even with all that without a ton of OEMS to back them up you do not get enough sales on an individual basis. The Enthusiasts who buy the chips separate to build their own machine are much fewer than the guy walking into Fry's/Best Buy/Walmart/Whatever your shop is called to pick up a laptop/tablet/desktop. AMD still has to get enough OEM's for their components to sell significant quantities to really put them back into the market and really there are too few machines available at each price segment that they get overlooked to easily.
Sony Xperia SI guess the biggest problem is that they have nothing competitive in the works to counter Maxwell.

They are so late with 20 nm if ever jump on it. Was it Rory's decision not to go to new manufacturing processes first as soon as possible? Probably this is the reason why he's gone now.

Too many wrong managerial decisions and strategies.

16 nm is still at least a year away, so the clouds over their heads will only get heavier.
AMD is not late with 20nm and neither is Nvidia, its the foundry's who are late and the reason Nvidia chose to not hop onto the 20nm chips and just released their 28nm chip again but on Maxwell architecture. We would not have gotten the GTX 980 and 970 had it been on the 20nm process and its the reason Nvidia is predicted to just skip 20nm altogether and go straight to 16nm for the next lineup. They may backpedal of course and go to 20nm depending but AMD chose to wait and go to the next process which caused the delay.
john_What Nvidia did, redesign their architecture and optimize it as much as possible for the 28nm, AMD couldn't do it or choose not to do it. They didn't had the engineers, the time, the money, maybe all those, so they just did a few improvements in the current architecture to call it 285 and 285X until 20nm would come. Save millions of dollars in R&D, replace the 280 series with cheaper to manufacture 285s but sell them for more, then throw a watercooling on the biggest 295X model and sell it for even more than 290X. Nvidia never sells their top cards cheap anyway, right? Well 970 came at $330 and not $450 for example and AMD's strategy gone to the dustbin with 285X and maybe 295X, if there was any, canceled.
Nvidia realized early on that to get out a chip earlier they had to keep on the old process so they just designed around that. They will move on to 16nm based on rumors and skip 20nm all together unless the 16nm process is very delayed as well. There was also never a 295X because the rumor that Hawaii had more to unlock/give proved false after better shots of the die were released and the 285X was never officially announced. The 285 was to make a cheap alternative to the 280 because that area is a area that many gamers on a budget go for and producing such a card that was already basically a neutered chip with all the extra bells and whistles was just not a very profitable area and they even made the card smaller, lowered power consumption, and increased performance while putting a smaller memory bus but it definitely was nothing special in the end. The GTX 970 has shocked us all but it is believed to just be making room for a 970ti later based on how many cores are disabled which will fill the mid point. I believe the 970 was more of a spite at the R9 290 being priced so cheap and powerful compared to its bigger brother and it became similar to how the GTX 670 was performance wise to the GTX 680.
RejZoRPeople predicting death of AMD and they aren't even in the red numbers lmao...
Thank you!^
Posted on Reply
#36
john_
RejZoRPeople predicting death of AMD and they aren't even in the red numbers lmao...
I was laughing at people predicting AMD's death from around 2006. The problem here is not if AMD will close tomorrow morning. The question is if it can stay competitive. They lost the competition race with Intel so badly, that they can be competitive only where Intel let them, and there is a possibility to lose the competition race to Nvidia also. The major fear here is down the road, in 4-5 years, AMD to become the next VIA. VIA didn't gone bankrupt, didn't close, they are still alive and who knows maybe they are not on the red, but who cares????
Posted on Reply
#37
Sony Xperia S
john_I was laughing at people predicting AMD's death from around 2006. The problem here is not if AMD will close tomorrow morning. The question is if it can stay competitive. They lost the competition race with Intel so badly, that they can be competitive only where Intel let them, and there is a possibility to lose the competition race to Nvidia also. The major fear here is down the road, in 4-5 years, AMD to become the next VIA. VIA didn't gone bankrupt, didn't close, they are still alive and who knows maybe they are not on the red, but who cares????
Yes, or in other words said - AMD would be like a brown dwarf, the remnants of an once upon a time alive star. People will know it's there but its existence will be close to meaningless.
Intel don't price according to what AMD is doing - never really have.
Intel don't experience real competitive pressures from AMD. We cannot argue that this indirectly or directly reflects on the overall stagnation of the market and very very slow progress with computational performance, if any.
Posted on Reply
#38
HalfAHertz
HumanSmokeThey are cutting workforce to decrease short term expenditure and lighten the debt burden. You can't sugarcoat AMD's continual downsizing as anything else.

They won't go under. The x86 / x86-64 IP cross licence with Intel will keep them afloat and largely autonomous. They probably can't be subsumed by another company without licensing issues, and thanks to IP their actual value exceeds their book (market cap) value in any case.

That's just plain FUD, and easily disproved FUD at that. Intel haven't had a competitor in the HEDT market for years, yet:

5960X ($999)........4960X ($990)......3960X ($999)......965XE ($999).....QX9770 ($1399)
5930K ($583)........4930K ($555)......3930K ($583)......940 ($562).....Q9550 ($530)
5820K ($389)........4820K ($310)......3820K ($294)......920 ($284).....Q9450 ($316)

Intel don't price according to what AMD is doing - never really have. If anything, the reverse is true. When AMD had a truly competitive architecture with no proviso's, their pricing reflected that (remember the days of $1K K8's ? )

On a side note. this result answers why AMD's directors have been selling their shares in such large quantities for the last few weeks.
You've got a good point but keep in mind that at that point AMD couldn't cope with the demand and markets adjusted accordingly.

Also as you yourself noted Intel's HEDT entry platform costs has been on the rise for the last 3 generations: 3820 to 4820 = >5%, 4820 to 5820 => 25%.
Posted on Reply
#39
suraswami
HumanSmokeTrue enough, although that said, Lisa Su's total remuneration package as AMD's COO was $3,591,408 of which only $574,995 was salary. Rory as CEO made $8.2 million(by comparison Nvidia's Jen-Hsun made $6 million and Intel's CEO Brian Krzanich received $9.5 million)
.............
Holy Crap!! they suck so much blood? more than Indian mosquitoes?
Posted on Reply
#40
Sony Xperia S
suraswamiHoly Crap!! they suck so much blood? more than Indian mosquitoes?
I thought you would say that Rory Read's renumeration package wasn't corresponding neither to the quality of the company he had run, nor to the quality of his own work. Unjust as hell.
Posted on Reply
#41
Steevo
Companies do the whole "big pay" thing all the time, and the other than cash is made up in company stock, benefits, and things that can be written off.


Plus yes, getting a CEO who cares anymore is like trying to find a needle in a haystack.


OEM sales pay the bills and not much else, the margins are so low they won't make any real money off the deal.
Posted on Reply
#42
m0nt3
john_What Nvidia did, redesign their architecture and optimize it as much as possible for the 28nm, AMD couldn't do it or choose not to do it. They didn't had the engineers, the time, the money, maybe all those, so they just did a few improvements in the current architecture to call it 285 and 285X until 20nm would come. Save millions of dollars in R&D, replace the 280 series with cheaper to manufacture 285s but sell them for more, then throw a watercooling on the biggest 295X model and sell it for even more than 290X. Nvidia never sells their top cards cheap anyway, right? Well 970 came at $330 and not $450 for example and AMD's strategy gone to the dustbin with 285X and maybe 295X, if there was any, canceled.
Yes, I am sure AMD was calculating their own incompetence when they were projecting revenue for 4th quarter. How silly of me to think otherwise. Thank you for setting the record straight for me. Ok, AMD is dead because of nvidia GTX 9XX series. I'm sue that is what AMD was thinking when calculating their number, it was all nvidia's fault. You are so smart, yes you are!
Posted on Reply
#43
Sony Xperia S
Steevogetting a CEO who cares anymore is like trying to find a needle in a haystack
Aaaaa? Does it mean that AMD's CEOs don't care about what they were doing and have done?

Maybe getting a CEO who actually is an owner of the corporation would do it, no?!
Posted on Reply
#44
john_
m0nt3Yes, I am sure AMD was calculating their own incompetence when they were projecting revenue for 4th quarter. How silly of me to think otherwise. Thank you for setting the record straight for me. Ok, AMD is dead because of nvidia GTX 9XX series. I'm sue that is what AMD was thinking when calculating their number, it was all nvidia's fault.
The only problem with your sarcastic reply, other that thinking it is a smart post, is that I didn't tried to prove you wrong or something, just expressed an opinion about why AMD doesn't going to have a product before this holiday season. You have another opinion? Post it.
You are so smart, yes you are!
You are talking to yourself here of course, for writing "that clever", but needless and full of sarcasm post.
Congrats for your great achievement.
Posted on Reply
#45
xenocide
I find it hilarious everyone still believes AMD competes with Intel, and moreso that if AMD were to stop "being competitive" Nvidia and Intel would stagnate innovation and overprice the crap out of their products. Lets consider this, AMD can't get the money together for R&D like Intel and Nvidia, so they aren't super competitive as it is. If they disappear that means Intel and Nvidia have more problems than people realize, they then have to compete against themselves.

Intel and Nvidia would have to offer better refreshes and push themselves because who's going to want to buy a PC that is equivalent to their old one? For example, as it is consumers basically upgrade from an old Intel system to a new Intel system when it's convenient for them. Intel hasn't had to worry about AMD since Core2 came out, but that hasn't stopped them from pushing themselves further and further with the advent of Nahelem and Sandy Bridge. Intel needs to keep making better products, no for system builders to push games, but for corporations to buy a dozen or so workstations with 2-4 Xeons each in them, or the DOD to buy a dozen servers with hundreds of Xeons in them. If they stopped innovating they would lose billions in revenue from the people who actually push their hardware to the limits.

There's also this weird sentiment that because AMD has failed to deliver Intel and Nvidia are lazy and that's why we haven't seen massive performance gains. Once again, wrong. Nvidia (just like AMD) is only able to produce newer products as well as TSMC can manufacture them. 20nm and 14nm are a real jump, and are going to be very difficult--and costly--for TSMC to get down. On top of manufacturing issues, all 3 are starting to hit the walls of physics. There's only so small they can make processors with current methods, and so quickly they can move electrons around. They also have made massive strides in energy efficiency, which is the first part of making a higher performing processor. If Nvidia wants to make a super powerful GPU, they need to make sure it will run in most consumers systems without a gigantic PSU, that means they need to create a very efficient framework and then scale up. Theoretically they could just keep slapping SMX modules on there but it makes manufacturing more problematic, and energy usage climbs quickly.
Posted on Reply
#46
Tonduluboy
I Never buy AMD GPU (BUT i did bought their cpu many times)
I was happy to see AMD in the profit situation.
I do not wish AMD to go Under. That will make Nvidia n Intel a monopoly company.

From where i am from, electricity, Internet, Airports, etc etc etc monopolize by a company really bad for consumers... Remember, competition reduce a product price...
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