Thursday, October 6th 2022
AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter
AMD (NASDAQ:AMD) today announced selected preliminary financial results for the third quarter of 2022. Third quarter revenue is expected to be approximately $5.6 billion, an increase of 29% year-over-year. AMD previously expected revenue to increase approximately 55% year-over-year at the mid-point of guidance. Preliminary results reflect lower than expected Client segment revenue resulting from reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain.
Revenue for the Data Center, Gaming, and Embedded segments each increased significantly year-over-year in-line with the company's expectations. Gross margin is expected to be approximately 42% and non-GAAP(*) gross margin is expected to be approximately 50%. AMD previously expected non-GAAP gross margin to be approximately 54%. The gross margin shortfall to expectations was primarily due to lower revenue driven by lower Client processor unit shipments and average selling price (ASP). In addition, the third quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses.
Third quarter operating expenses are expected to be approximately $2.4 billion and non-GAAP operating expenses are expected to be approximately $1.5 billion. Non-GAAP operating expenses are lower than previous expectations of $1.6 billion driven by lower variable compensation expenses in the quarter.
"The PC market weakened significantly in the quarter," said AMD Chair and CEO Dr. Lisa Su. "While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5 nm data center and graphics products later this quarter."
This update does not present all necessary information for an understanding of AMD's financial condition as of the date of this release, or its results of operations for the third quarter of 2022. As AMD completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make judgments in a number of areas. It is possible that AMD may identify items that require it to make adjustments to the preliminary financial information set forth above and those adjustments could be material. AMD does not intend to update any financial information prior to release of its final third quarter financial statement information, which is currently scheduled for Nov. 1, 2022.
AMD Q3'22 Earnings Conference Call
AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) on Nov. 1, 2022 to discuss its third quarter 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.
Revenue for the Data Center, Gaming, and Embedded segments each increased significantly year-over-year in-line with the company's expectations. Gross margin is expected to be approximately 42% and non-GAAP(*) gross margin is expected to be approximately 50%. AMD previously expected non-GAAP gross margin to be approximately 54%. The gross margin shortfall to expectations was primarily due to lower revenue driven by lower Client processor unit shipments and average selling price (ASP). In addition, the third quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses.
"The PC market weakened significantly in the quarter," said AMD Chair and CEO Dr. Lisa Su. "While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5 nm data center and graphics products later this quarter."
This update does not present all necessary information for an understanding of AMD's financial condition as of the date of this release, or its results of operations for the third quarter of 2022. As AMD completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make judgments in a number of areas. It is possible that AMD may identify items that require it to make adjustments to the preliminary financial information set forth above and those adjustments could be material. AMD does not intend to update any financial information prior to release of its final third quarter financial statement information, which is currently scheduled for Nov. 1, 2022.
AMD Q3'22 Earnings Conference Call
AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) on Nov. 1, 2022 to discuss its third quarter 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.
150 Comments on AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter
So IMO we should wait a few months so companys start realising their PC parts are not selling well enough so they will need to adjust prices.
As for waiting for a few months I fear this could drag us down to somewhere closer to the 2008 crisis, except in the broader economy! The people in managerial positions & executives simply do not care for their lowest paid employees & I know from experience how bad the greed is at every (higher) level :shadedshu:
If you're saving yourselves from the GPU robbery, the energy bandits will probably get you & if you survive that then surely the loan sharks! Unless the people in power start relinquishing that & give more back to the society things will only get worse, the issue is many of us don't have time to really fight them because we're busy feeding our families.
And the chances of that are exactly zero!
20% price cut won't do much when just the motherboards went up 50%, DDR5 is more expensive than 4 for not much real world gain, power consumption is off the roof - new PSU, higher power bill - lots of people will decide against the upgrade this fall and winter. Because yes, they will invest in other fun things like electricity, heating, food.
Last gen graphics cards good enough for 4k.
Simply no point to buy latest gen stuff except for vanity or got money to burn.
With the surge in crapto during all the lockdowns, increases in online gaming services and so on, I guess they thought this new wave of demand for PC hardware would continue but it didn't.
Lockdowns are more or less over, crapto crashed and all that caused a drop in demand for PC hardware, esp for GPU's which were at that time insanely priced.
With the drop also came decreased profit margins of course and that's natural.
It make a take a couple of quarters for thing to readjust and level out but for now it's gonna be a bumpy ride for all of them, not just AMD themselves.
intel core F series is better in every way in sub 200$ budget
Heck I would upgrade CPU+Mobo+RAM every 2 years too if they give me 50% more perf LOL
86 cores back then, it's 64 cores now & at least 10~20x faster in MT workloads.Since the MSRPs were supposed to be lower than Nvidia and RX6000-series weren't as good for ETH mining as Ampere or RDNA1 cards, I'm wondering - where were the highest-margin, most profitable cards?! The miners weren't particularly interested in them to the same scale as Nvidia, and I didn't see them snag many OEM wins either. High prices of the few cards on shelves implies a scarcity, because if there was new stock that was queueing up in inventory, prices would have been reduced to clear shelf space.
For AMD to make record profits, they have to have products on shelves that people can buy without feeling scalped. For the last two years, that hasn't really happened for Navi21, even when other AMD cards and the entire Nvidia range have returned to near-MSRP.
Intel will be reporting their Q3 numbers on the 27 October and they have already indicated that they are seeing a similar impact for the same reasons.
Not sure if it's an OEM decision or AMD's but they should be more price competitive than that & where the heck are 6 core zen3+ mobile chips?
Large upgrades from Covid times and sky-rocket prices of new products will make it challenging not only for AMD, bot for all of them together.
PC market has shrank 15-20%, so AMD's numbers are not surprising at all. It will be similar from Nvidia, Intel, ARM and others.
Just like every other tech company
Working from home over and covid pricing coming to an end
Still made way more profit than pre-covid. This is just things starting to return to per-pandemic normalcy.
"$160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses"
Impossible...........we were told was nothing in stock anywhere on planet ;)
I’m curious how Apple is going to do. They went the other direction with power consumption on their desktop, which should make for higher margins, and the iPhone 14 pro is doing really well.
This unsustainable growth (aka corporate greed) can't be upheld, most of the big players still do very well, just not 3-5 times YoY for the foreseeable future. Fun part, it most likely will kick a recession to a full depression in many places. :(
surge & purge....
What goes around comes around (and usually bites you in the arse on the return trip !)....
Forget but never forgive......
this is how the market works, Capitalism 101 at it's finest :D
HOWEVER, all the companies that became soooo accustomed overpricing everything during the pandemic at outrageous scapler's prices are now feeling the pain of those decisions....
Pain, when used properly, a wonderful motivator, it is !
Those "potential" numbers will be missed... by a lot, so, you're are incredible wrong here. And the bleeding is just getting started for AMD! Oh, BTW, all metrics matters when a company is being evaluated. :laugh:
Nice try. NOT! :roll:
Early Zen (1) development started in 2012. Zen2 was a major revision on Zen1, meaning that it couldn't even be started until the overall Zen1 architecture was finalized. It could obviously start well before they had functioning silicon, but that's something that happens late in development anyway. So, unless you count the idea of there being a further development of Zen1 as Zen2 being "under development", then there is literally no way that project started before Dr. Su took over as CEO.