AMD Reports 2016 Second Quarter Results

[btarunr]

AMD (NASDAQ: AMD) today announced revenue for the second quarter of 2016 of $1,027 million, operating loss of $8 million, and net income of $69 million, or $0.08 per diluted share. Non-GAAP operating income was $3 million and non-GAAP net loss was $40 million, or $0.05 per share.

"In the second quarter we accomplished a significant milestone as we returned to non-GAAP operating profitability based on solid execution and strong demand for our semi-custom and graphics products," said Lisa Su, AMD president and CEO. "Based on the strength of our semi-custom products and demand for our latest Radeon RX GPUs and 7th Generation A-Series APUs, we are well positioned to drive growth and market share gains in the second half of the year."



Q2 2016 Results

• Q2 2016, Q1 2016 and Q2 2015 were 13-week fiscal quarters.
• Revenue of $1,027 million, up 23 percent sequentially and up 9 percent year-over-year primarily due to higher sales of semi-custom SoCs.
• Gross margin of 31 percent, down 1 percentage point sequentially, due primarily to a higher mix of semi-custom SoC sales.
• Operating expenses of $353 million, compared to $344 million for the prior quarter. Non-GAAP operating expenses of $342 million, compared to non-GAAP operating expenses of $332 million in Q1 2016, primarily due to increased marketing investments.
• Operating loss of $8 million, compared to an operating loss of $68 million in Q1 2016. Non-GAAP(1) operating income of $3 million, compared to non-GAAP(1) operating loss of $55 million in Q1 2016, primarily due to higher sales.
• Net income of $69 million, earnings per share of $0.08, and non-GAAP(1) net loss of $40 million, non-GAAP(1) loss per share of $0.05. This is compared to a net loss of $109 million, loss per share of $0.14 and non-GAAP(1) net loss of $96 million, non-GAAP(1) loss per share of $0.12 in Q1 2016. The GAAP sequential and year-over-year improvements were primarily due to a gain of $150 million related to the formation of our assembly, test, mark and pack (ATMP) joint venture (JV) with Nantong Fujitsu Microelectronics Co., Ltd. (NFME), partially offset by related taxes of $27 million. The non-GAAP sequential and year-over-year improvements were primarily due to higher sales and an IP licensing gain.
• Cash and cash equivalents were $957 million at the end of the quarter, up $241 million from the end of the prior quarter, primarily due to net cash proceeds received from the ATMP JV transaction with NFME which closed in Q2 2016.
• Total debt at the end of the quarter was $2.24 billion, flat from the prior quarter.

Financial Segment Summary

• Computing and Graphics segment revenue of $435 million decreased 5 percent sequentially and increased 15 percent from Q2 2015. The sequential decrease was primarily due to decreased sales of client desktop processors and chipsets and the year-over-year increase was driven primarily by increased notebook processor and GPU sales.
  o Operating loss was $81 million, compared with an operating loss of $70 million in Q1 2016 and an operating loss of $147 million in Q2 2015. The sequential increase was primarily due to lower revenue. The year-over-year improvement was primarily due to higher revenue and lower operating expenses.
  o Client average selling price (ASP) increased sequentially driven by a higher desktop processor ASP and decreased year-over-year primarily due to lower notebook processor ASP.
  o GPU ASP remained flat sequentially and decreased year-over-year. The year-over-year decrease was primarily driven by lower desktop GPU ASP.
• Enterprise, Embedded and Semi-Custom segment revenue of $592 million increased 59 percent sequentially and increased 5 percent year-over-year due to higher sales of semi-custom SoCs.
  o Operating income was $84 million compared with $16 million in Q1 2016 and $27 million in Q2 2015 primarily due to higher revenue from the sale of semi-custom SoC products and a $26 million IP licensing gain in Q2 2016 compared to $7 million in Q1 2016.
• All Other category operating loss was $11 million compared with $14 million in Q1 2016 and $17 million in Q2 2015.

Recent Highlights

• AMD and NFME created a joint venture offering differentiated ATMP capabilities to both AMD and a broader range of customers.
• The AMD Board of Directors appointed Board member John Caldwell as Chairman.
• AMD unveiled the Radeon RX GPU product lineup based on its new Polaris architecture based on 14nm FinFET technology, enabling generational leaps in energy efficiency and advancing the company's work to bring virtual reality to mainstream consumers.
• AMD announced availability of the Radeon RX 480 graphics card, which is designed to deliver premium VR experiences to the largest segment of GPU buyers.
• AMD also announced the acquisition of software company HiAlgo Inc., a developer of unique PC gaming technologies, which will help drive future gaming innovation in Radeon Software that will benefit owners of Radeon RX Series GPUs and beyond.
• AMD launched its 7th Generation A-Series APU mobile processors ("Bristol Ridge" and "Stoney Ridge"), designed for powerful productivity and entertainment performance.
• AMD 7th Generation APUs can be found today in the HP ENVY x360, with new notebook designs from Acer, Asus, Dell, HP, Lenovo, and others expected to become available throughout 2016.
• AMD conducted the world's first live public demonstration of its upcoming x86 "Zen" processor core architecture in the next-generation AM4 desktop processor (codenamed "Summit Ridge").
• AMD extended its leadership in gaming as Microsoft announced two new AMD-powered game consoles to its Xbox family that enable the next generation of immersive gaming experiences through support for new technologies like HDR, 4K and high fidelity VR. The Xbox One S will go on sale in early August 2016, while the company's next-generation Project Scorpio is scheduled to arrive for holiday 2017.
• AMD continued to drive innovation in the professional graphics market with the introduction of the industry's only hardware-virtualized GPU for blade servers (AMD FirePro S7100X) and the world's first workstation graphics card with industry-leading 32GB memory support (AMD FirePro W9100 32GB).
• AMD joined with ARM, Huawei, IBM, Mellanox, Qualcomm Technologies and Xilinx to establish a new, open specification for high-performance, coherent interconnect technology designed to significantly improve compute efficiency for servers running datacenter workloads.
• AMD released its 21st annual corporate responsibility (CR) report detailing the company's progress toward its social and environmental goals.

Current Outlook
AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Cautionary Statement" below.

For Q3 2016, AMD expects revenue to increase 18 percent sequentially, plus or minus 3 percent.

For additional details regarding AMD's results and outlook please see the CFO commentary posted at quarterlyearnings.amd.com.

View at TechPowerUp Main Site

 

[lanlagger]

this looks good... loss is close to zero. give market one half-ass good product *cough ZEN cough* and there will be a hefty profit.

 

[Nobody99]

AMD (NASDAQ: AMD) today announced revenue for the second quarter of 2016 of $1,027 million, operating loss of $8 million, and net income of $69 million, or $0.08 per diluted share. Non-GAAP operating income was $3 million and non-GAAP net loss was $40 million, or $0.05 per share.

Does that mean you have to pay money as shareholder?

 

[bug]

I'm not that savvy in accounting, but isn't non-GAAP something anyone can make up as they wish?

 

[R-T-B]

Does that mean you have to pay money as shareholder?

No. You never have to "pay money" by holding stock. You can lose what you put in value wise, of course. But that's all.

 

[Caring1]

No. You never have to "pay money" by holding stock. You can lose what you put in value wise, of course. But that's all.

Technically major shareholders are liable for debts if the company goes under.

 

[R-T-B]

Technically major shareholders are liable for debts if the company goes under.

Was unaware of that, but I was speaking small scale stockholders anyways.

 

[bug]

Was unaware of that, but I was speaking small scale stockholders anyways.

To be honest, it's pretty complicated:
https://en.wikipedia.org/wiki/Limited_company
https://en.wikipedia.org/wiki/Unlimited_company

 

[Basard]

this looks good... loss is close to zero. give market one half-ass good product *cough ZEN cough* and there will be a hefty profit.

What has it been? Ten years since there have been profits?

 

[R-T-B]

As happy as I am for this, I can't help but feel like I just told a retard he did good for getting his pants on all by himself.

This is what companies are supposed to do. I hope it continues. Then and only then will it be impressive.

 

[JATownes]

As happy as I am for this, I can't help but feel like I just told a retard he did good for getting his pants on all by himself.

HAHAHAHA! Love it! This might have to be my new signature line!

 

[ZoneDymo]

As happy as I am for this, I can't help but feel like I just told a retard he did good for getting his pants on all by himself.

This is what companies are supposed to do. I hope it continues. Then and only then will it be impressive.

idk what you are trying to say, are you saying its not impressive for someone born with limited brain function to do an act that is considered difficult for them?
Is it the act that matters and not the state that the individual is in that determines whether or not its an achievement?

A company that is doing relatively bad for some time, starts to turn things around and that is not worthy of praise because there are other companies that do well all the time (and we conveniently for the moment "forget" the many companies struggling or went bankrupt especially thanks to the crisis)?

"this is what companies are supposed to do", guess you are one of those guys that does not thank their doctor after a successful operation, or a fireman for running into a house to safe whoever is in there because "it was their job".

 

[yogurt_21]

stock up 6% on the news. Investors like it.

should be a good year despite performance complains and lack of highend the 480's are flying off shelves. If the 470's and 460's do the same that will be a good year for gpu sales. The the PS4 neo is expected to launch around the time playstation vr does in October. That should be a boost for amd as well.

Based on what we're seeing from polaris it's possible zen could target the same. Not earth shattering but comes at a decent price/perf (of which the 4GB RX 480 dominates) while offering some features that will be useful down the road. Also has better perf/watt than its predecessors but not so much that it meets competitors standards.

Do that with zen and I'll bet it also flys off the shelves. People seem keen on going for something different lately. That's good news for amd.

 

[GhostRyder]

Thats the best they have done in a couple years...Well lets see what happens with Zen then because that will decide whether they will stay a float.

 

[dozenfury]

It's heading in the right direction, but still far from out of the woods. $2.2B debt and ~$900M cash, with basically break-even earnings isn't something that gives you warm fuzzy feelings on it's own. But next quarter estimates look to be trending upward. We definitely need AMD around to give Intel and NV competition, so here's to hoping their custom and Zen products pan out.

My main concern is just that their cash levels and debt are really going to tie their hands in R&D to try to keep up with Intel and Nvidia. As we saw with the 480, it's easier and cheaper to market than it is to really make a faster product. But those are short-term victories once benchmarks come out and reality hits.

 

[Fx]

idk what you are trying to say, are you saying its not impressive for someone born with limited brain function to do an act that is considered difficult for them?
Is it the act that matters and not the state that the individual is in that determines whether or not its an achievement?

A company that is doing relatively bad for some time, starts to turn things around and that is not worthy of praise because there are other companies that do well all the time (and we conveniently for the moment "forget" the many companies struggling or went bankrupt especially thanks to the crisis)?

"this is what companies are supposed to do", guess you are one of those guys that does not thank their doctor after a successful operation, or a fireman for running into a house to safe whoever is in there because "it was their job".

I couldn't agree more. Perhaps RTB would need to be the largest shareholder of AMD to fully appreciate the accomplishment.

 

[bug]

stock up 6% on the news. Investors like it.

Stocks will go up even some company is expected to be in the red and it turns out it is (because now you know exactly how bad the situation is and buy thinking things will get better). It's the uncertainty the investors don't like.
It's a complicated market...

 

[Octavean]

Technically major shareholders are liable for debts if the company goes under.

Really,....?

I didn't know that either. What is the point of incorporating if it doesnt protect you as an individual from such things?

 

[thesmokingman]

Really,....?

I didn't know that either. What is the point of incorporating if it doesnt protect you as an individual from such things?

I'm not a lawyer on Suits, but yea, I don't think merely holding stock puts one under any liability. To be held liable, you'd have to enter an agreement or by operation, neither of which affects normal folk holding shares.

 

[R-T-B]

idk what you are trying to say, are you saying its not impressive for someone born with limited brain function to do an act that is considered difficult for them?
Is it the act that matters and not the state that the individual is in that determines whether or not its an achievement?

A company that is doing relatively bad for some time, starts to turn things around and that is not worthy of praise because there are other companies that do well all the time (and we conveniently for the moment "forget" the many companies struggling or went bankrupt especially thanks to the crisis)?

"this is what companies are supposed to do", guess you are one of those guys that does not thank their doctor after a successful operation, or a fireman for running into a house to safe whoever is in there because "it was their job".

Don't take my comment too seriously. AMD may have limited brain function from an economic perspective, was sort of my point. I hope they don't... but... will time will tell.

"this is what companies are supposed to do", guess you are one of those guys that does not thank their doctor after a successful operation, or a fireman for running into a house to safe whoever is in there because "it was their job".

No, I think AMD did great. Don't get me wrong. I also thanked my doctor when he patched together what's left of my arm. That doesn't mean I wouldn't ream him if next week he attached my other arm to my stomach.

My real point is, I hope this is not a one time thing. We all do.

 

[Divide Overflow]

AMD has got to stop hemorrhaging cash and get profitable. The market desperately needs strong competition.

 

[ensabrenoir]

Great!!!........now don't go 'a buying a V.R. company or something.

 

[Prima.Vera]

Seriously, if AMD doesn't deliver with ZEN and also if they don't do anything this year to challenge nGreedia..... Game over dude, game over.

 

[Fluffmeister]

I suspect ZEN will be average at best relative to Intel, but AMD fans seem to lap up average, so ultimately AMD will be fine.

 

[Frick]

I suspect ZEN will be average at best relative to Intel, but AMD fans seem to lap up average, so ultimately AMD will be fine.

It's the only realistic thing to expect. And avarage is fine, if priced accordingly