This afternoon, AMD released their financial results for the third quarter, which ended September 27, 2014. While revenue was down slightly from Q2, the net income was positive for this first time this fiscal year. non-GAAP Earnings Per Share was $0.03, which missed analysts’ projections of $0.04. Earlier in the quarter projections were as high as $0.07 per share, but the Computing and Graphics segment was mixed this quarter due to “challenging market conditions” according to AMD.

Starting July 1st, 2014, AMD reorganized their reporting structure into two groups. The Computing and Graphics group focuses on desktop and notebook processors, chipsets, discrete desktop GPUs, and workstation GPUs. The Enterprise, Embedded, and Semi-Custom group includes server processors, embedded processors, dense servers, semi-custom SoCs, engineering services, and royalties, which is pretty much every market AMD is in other than the traditional desktop/notebook market.

AMD Q3 2014 Financial Results (GAAP)
  Q3'2014 Q2'2014 Q3'2013
Revenue (Billions) $1.43 $1.44 $1.46
Operating Income (Millions) $63 $63 $95
Net Income (Millions) $17 -$36 $48
Earnings Per Share $0.02 -$0.05 $0.06

Revenue for Q3 2014 was $1.43 billion, down just under 1% from Q2 2014’s $1.44 billion. As compared to Q3 2013, revenue was down 2%. Operating Income was $63 million (non-GAAP $66M) for the quarter, which is also down from the previous quarter and year-over-year. Net income was $17 million (non-GAAP $20M) for the quarter which is up from the $36 million loss last quarter, but down from $48 million profit in Q3 2013. Gross margin was flat from last quarter at 35%.

AMD Q3 2014 Financial Results (Non-GAAP)
  Q3'2014 Q2'2014 Q3'2013
Revenue (Billions) $1.43 $1.44 $1.46
Operating Income (Millions) $66 $67 $78
Net Income (Millions) $20 $17 $31
Earnings Per Share $0.03 $0.02 $0.04

The Computing and Graphics segment revenue decreased 6% from last quarter and 16% year-over-year. AMD states the primary decrease is due to by lower chipset and GPU sales as compared to last quarter, and decreased notebook processor and chipset sales as compared to a year ago. The Operating Loss for the division was $17 million, which is up (or down, depending on how you look at negative numbers) substantially from the $6 million loss last quarter and $9 million loss in Q3 of last year.  The Average Selling Price (ASP) of CPUs/APUs actually increase sequentially and year-over-year. Discrete GPU ASP decreased over last quarter, but increased over the same period last year. The Computing and Graphics segment is a tough market for AMD right now. Intel is moving to 14 nm while AMD has to rely on Global Foundries and other fabs to attempt to catch up. This hampers their ability to match Intel on the performance per watt metric certainly. On the GPU front, NVIDIA just released the Maxwell based GTX 980 and 970, as well as the mobile counterparts which have shown impressive performance, and efficiency. Hopefully AMD can counter with some new products in the near term.

The Enterprise, Embedded, and Semi-Custom division fared much better for Q3, with a 6% sequential gain in revenue and 21% year-over-year. Operating income for the quarter was $108 million which was up from the $97 million of Q2, and $92 million of Q3 2013. As with the last couple of quarters, AMD attributes the gains primarily due to increased sales of semi-custom SoCs. Their embedded revenue grew by “double digits” as compared to last quarter. Clearly AMD has found a niche here where they can use their expertise in new markets to shore up the company, and so far, it has been successful. In addition, AMD has closed two new Semi-Custom SoC designs this quarter which should help this division continue its growth.

Results Per Division
  Q3'2014 Q2'2014 Q3'2013
Computing and Graphics Revenue (Millions) $781 $828 $925
Computing and Graphics Operating Income (Millions) -$17 -$6 $9
Enterprise, Embedded, and Semi-Custom Revenue (Millions) $648 $613 $536
Enterprise, Embedded, and Semi-Custom Operating Income (Millions) $108 $97 $92

In addition, AMD is also trying to cut costs by reducing their workforce by about 7% Currently, they have 10,149 employees as of the end of Q3, which means around 710 people will be cut from the company. Most of these cuts should be done by the end of Q4. AMD will then adjust their real estate footprint to accommodate the smaller workforce, which could mean additional infusions of cash from the sale of buildings. They are hoping to have savings of $9 million for Q4 and $85 million for FY 2015.

Their forecast for Q4 is not rosy either. AMD is expecting revenue to decrease 13% from Q3, plus or minus 3%. However they are also hoping to drop expenses from the current guidance of $420 to $450 million, to $385 million, which means they are hoping for a positive non-GAAP free cash flow.

Although AMD did miss investor earnings, they did not miss by much and the net result was a quarter where the company managed to turn a tiny profit, which is in stark contrast to the first couple of quarters for 2014. Unfortunately, AMD’s losses all stem from the desktop PC industry. Intel just had a record quarter, so there is certainly money to be made in this sector. We will have to see how Dr. Su, the new CEO of AMD, addresses this for the next quarter.

 

Source: AMD Investor Relations

POST A COMMENT

81 Comments

View All Comments

  • sonicmerlin - Saturday, October 18, 2014 - link

    You really are desperate to avoid blaming AMD. This had nothing to do with intel and everything to do with AMD buckling down on the utter failure of an architecture that is bulldozer. Reply
  • JlHADJOE - Sunday, October 19, 2014 - link

    A lot of AMD's "firsts" actually come from the DEC Alpha line of processors. The IMC first appeared on the DEC Alpha 21064/6, introduced way back in 1992. Ditto with the double-pumped FSB that gave Athlons their edge over the Pentium II/III.

    During those early days, Intel was just catching up to RISC with the Pentium. Jerry Sanders gave AMD an excellent jump start by bringing people from DEC (Dirk Meyer!) on board and incorporating a lot of technology that Intel was just starting to develop on its own.
    Reply
  • dragonsqrrl - Friday, October 17, 2014 - link

    "They've always been behind Intel in process technology."

    Uhh no they haven't. Am I the only one who remembers the 90nm Athlon 64's?
    Reply
  • atlantico - Friday, October 17, 2014 - link

    The Bulldozer architecture is incredibly good, I can't see a single reason that would prevent me from recommending it to even demanding desktop users.

    Price? Great. Performance? Better than anyone needs.

    But the market has spoken, the new FX line has been ridiculed by idiot nerds and their tag-alongs (who don't know anything anyway)

    And AMD has blinked. The so called APU architecture is the future, but when Bulldozer was introduced, APUs were not ready, but in 2015 they probably will be.

    In reality I don't know what AMD is planning, but I suspect that getting rid of Rory Read was a good move, he was getting the company nowhere.
    Reply
  • sonicmerlin - Friday, October 17, 2014 - link

    Is this sarcasm? Or do you honestly believe the Bulldozer architecture is "incredibly good"? I just... you can't be serious. Reply
  • silverblue - Saturday, October 18, 2014 - link

    If you were to look at "good enough computing", perhaps, but the competition has moved on. There are strong points to the architecture, and I maintain my belief that an octo-core Steamroller would be a very strong multithreader, but they'll only really be reaching performance parity with Sandy Bridge over the next year or so, some four years too late. Reply
  • przemo_li - Friday, October 17, 2014 - link

    Linux radeon driver is quite good this days :)

    Even to the point where AMD is ready to reuse some of that code for their Linux Catalyst efforts.

    Hope that layoffs spare floss folks.
    Reply
  • Samus - Friday, October 17, 2014 - link

    Unless they have an ace up their sleeve, I don't think their graphics division will be profitable much longer either. The channel has indicated that since Maxwell, AMD's 290 and 290X sales have almost completely stalled. AMD taking a month to act on a price-cut didn't help, either.

    I hope they survive. NVidia AND Intel need competition, even if its weak competition...because it was the lack of competition that brought us the Pentium 4's Netburst catastrophe and NVidia's initially weak, overprice Fermi cards...the last time ATI was really dominating graphics with the 4000/5000 series.
    Reply
  • silverblue - Friday, October 17, 2014 - link

    AMD were providing plenty of competition when the P4 came out, and the 5000 series came out before Fermi meaning ATi were on top at the time. No, definitely not a lack of competition; the more recent CPU launches by Intel are more indicative. Reply
  • atlantico - Friday, October 17, 2014 - link

    While none of us have secret information on AMDs near and far future plans and capabilities, there is one third party which does: Apple.

    Apple has been moving all its new products to AMD GPUs. Including most recently Apple's new retina 5K iMac and the MacPro.

    Apple knows something we do not and it votes with confidence for AMD.
    Reply

Log in

Don't have an account? Sign up now