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:
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:
Recent Highlights
For Q4 2014, AMD expects revenue to decrease 13 percent, plus or minus 3 percent, sequentially.
"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.
- 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.
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.
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.
For Q4 2014, AMD expects revenue to decrease 13 percent, plus or minus 3 percent, sequentially.
46 Comments on AMD Reports 2014 Third Quarter Results
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.
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.
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 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.
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?
hexus.net/business/news/components/75953-amd-axe-seven-per-cent-staff-poor-q3-performance/
All eyes on the new Boss to turn it around......
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%.
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.
Maybe getting a CEO who actually is an owner of the corporation would do it, no?!
Congrats for your great achievement.
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.
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...