AMD Reports Q4 FY 2014 And Full Year Results
by Brett Howse on January 20, 2015 8:30 PM EST- Posted in
- CPUs
- AMD
- Financial Results
AMD president and CEO, Dr. Lisa Su, announced the company’s Q4 results, with revenue for the quarter coming in at $1.24 billion, with a gross margin of 29%. Earnings per share based on GAAP results was a loss of $0.47 per share. Compared to Q3, revenue dropped 13%, and year-over-year the drop was 22%. Operating income dropped $393 million from Q3 (623% decrease) and is well down from the Q4 2013 value of $135 million with a posted operating loss this quarter of $330 million. Net income fell from $17 million last quarter and $89 million last year to a $364 million loss, which is a pretty substantial change.
| AMD Q4 2014 Financial Results (GAAP) | |||||
| Q4'2014 | Q3'2014 | Q4'2013 | |||
| Revenue | $1.24B | $1.43B | $1.59B | ||
| Operating Income | -$330M | $63M | $135M | ||
| Net Income | -$364M | $17M | $89M | ||
| Gross Margin | 29% | 35% | 35% | ||
| Earnings Per Share | -$0.47 | $0.02 | $0.12 | ||
AMD had three large reasons for the loss this quarter which hit their GAAP numbers pretty hard. First, they had yet another write down of their SeaMicro and ATI acquisitions, which they attribute to a decline in their stock prices. This cost them $233 million this quarter. Second, they have had to perform a write down for their second generation APU products, which they have listed higher on their balance sheets than they can sell them for now, however they do expect to sell through their inventory. This contributed to a $58 million non-cash charge. Finally, restructuring charges based on layoffs and the departure of their CEO, as well as real estate restructuring charges cost an additional $71 million. As these are all one time charges, AMD has also released Non-GAAP results which exclude these write downs.
On a Non-GAAP basis, operating income was $36 million, which is down 45% from last quarter’s $66 million value, and down year-over-year from the $91 million operating income from Q4 2013. Net income equates to $2 million, down from $20 million last quarter and $45 million last year, and Non-GAAP earnings per share is $0.00, which can also be spelled as zero, which missed analyst’s expectations of $0.01 per share. The core business is getting to the break-even point, and AMD has said that they have had six consecutive quarters of Non-GAAP profitability, but even that is on a razor’s edge with this quarter’s numbers.
| AMD Q4 2014 Financial Results (Non-GAAP) | |||||
| Q4'2014 | Q3'2014 | Q4'2013 | |||
| Revenue | $1.24B | $1.43B | $1.59B | ||
| Operating Income | $36M | $66M | $91M | ||
| Net Income | $2M | $20M | $45M | ||
| Gross Margin | 34% | 35% | 35% | ||
| Earnings Per Share | $0.00 | $0.03 | $0.06 | ||
Full numbers for the year had revenue of $5.51 billion, up from $5.30 billion in 2013, and the GAAP operating loss was $155 million for 2014, down from the $103 million operating income for 2013. GAAP net income for 2014 was down as well, to a $403 million loss, exceeding 2013’s loss of $83 million. Non-GAAP values for 2014 were slightly better, with a $235 million operating income and a small profit of $51 million for the fiscal year. Once again, the core business is breaking even, but the heavy write downs are hurting the bottom line.
Looking at individual business lines, the Computing and Graphics segment had a net revenue for Q4 of $662 million, down 15% from Q3 and down 16% from Q4 2013. Lower desktop processor and GPU sales are the blame over last quarter, and desktop processors and chipset sales are called out as the decrease over last year’s numbers. Operating loss for the segment was $56 million, as compared to $17 million in Q3 and $15 million in Q4 2013. Lower channel sales were partially offset by lower operating expenses. Average selling price actually increased both sequentially and year-over-year for processors and chipsets, but GPU selling price decreased year-over-year. This is a soft spot for AMD, and they are diversifying their business outside of the traditional PC space in an attempt to keep one weak line from hurting the company so much. In 2012, about 90% of AMD’s business was based on the traditional PC industry, and by 2014 it was down to 60%, with the other 40% consisting of professional graphics, semi-custom chips, ARM based server, embedded, and ultra low-power clients. By 2015 they are estimating that 50% of their business will be these new markets.
Looking at the Enterprise, Embedded, and Semi-Custom group at AMD, you can see why they are moving that direction. For the full fiscal year, this group contributed $2.374 billion in revenue, and had an operating income of $399 million, both of these are up from 2013 where they managed only $1.577 billion in revenue and $295 million in operating income from this group. Looking at the quarter itself, revenue fell 16% from Q3’s $648 million to $577 million, which AMD attributed to a large run-up of chips for the Xbox One and PlayStation 4 in Q3, as Microsoft and Sony built up inventory for the holiday season. Operating income for Q4 was $109 million, down from $129 million Q4 2013 and up slightly from the $108 million last quarter.
The “All Other” category had no revenue for the quarter, but took a $383 million operating loss, which results in a 2014 operating loss of $478 million for the year. This is the category that is taking the write downs we have already discussed.
Looking ahead to 2015, AMD is listing 2015 as “profitable” at least as far as Non-GAAP figures. Q1 2015 guidance is for a 15% drop in revenue, plus or minus 3%. Gross margin should be up 5% to 34%.
AMD has seen some pretty serious competition in the PC segment, which is still their largest single contributor. Intel has just released their 14 nm parts, with a new CPU architecture due out later this year with Skylake. AMD does have a new APU on the horizon though with Carrizo, and they had working prototypes at CES. While CPU performance will likely not stun anyone due to the new CPU being still based on the Bulldozer architecture, GPU performance should be very competitive. These will be 15 to 35 watt parts, so as far as TDP they will compete against the just launched Broadwell-U. For lower power, AMD will have the Carrizo-L based on Puma+ CPU cores for the 10-25 watt range. All of this will still be on 28 nm though, which puts AMD at a pretty significant disadvantage for efficiency. The increased GPU power may be enough to sway some customers, since many people find they are not CPU bound anyway. Time will tell, and we look forward to seeing the new chips show up so we can test them out.
Source: AMD Investor Relations
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chizow - Thursday, January 22, 2015 - link
I agree, once both hit the market it will be evident which is better, however, we do know G-Sync does everything Nvidia said it would because it has been on the market for over a year. That's going to be a tough act for AMD to follow. :)chizow - Thursday, January 22, 2015 - link
Why would I need a video to confirm what PCPer and others have reported, that FreeSync isn't as good as G-Sync and the $100 premium is well worth it for something that is better and has already been on the market for months?Oh, and I bought an ROG Swift at launch, been enjoying it for the last 5 months while AMD keeps its fanboys like you waiting with baited breath.
Let's hope FreeSync hits the market before AMD goes belly up, it may be their final gift to their devoted AMD fanboys like yourself. ;)
silverblue - Wednesday, January 21, 2015 - link
Everybody is entitled to an opinion. Calling somebody out for being a fanboy when you've done the same yourself is a tad hypocritical, and wears a bit thin after a while.AMD are performance competitive for the price, but they've had to cut prices quite a lot to stay that way. I would also like to court controversy here by saying that Mantle has probably had a larger impact on gaming than PhysX, though if we're going to be balanced and all that, AMD have never truly offered anything to compete with 3D Vision nor GeForce Experience.
chizow - Wednesday, January 21, 2015 - link
Nah, I unapologetically buy what's best, if that were AMD, I'd buy AMD. But they haven't been the best, not in a long time. So yes, I'm a fanboy of the best I can afford and in every case, that means passing on cheaper, less supported alternatives like AMD.anubis44 is a massive AMD fanboy however, I mean he stll thinks FX chips and CMT was a good idea! Yes, he is the rare AMD *CPU* fanboy as well. That takes skill, devotion.
Mantle was a dud, just another problem to a question that was never asked: "Hey you know what would be great? Another API/platform from the minority stakeholder in the GPU business to further segment PC gaming!"
anubis44 - Wednesday, January 21, 2015 - link
chizow, just to prove how 'massive' an AMD fanboy I am, I actually went out and built myself an Intel Core i5 4690K gaming rig, since all the benchmarks and Intel fanboys were screaming about the 'incredible' performance advantage of the i5 4690K over my FX-8350 from over 2 years ago. Guess what? The average FPS in my favourite game, COH2, at even the comparatively low resolution I play at (1680x1050), where the CPU should have been given even more opportunity to play a role, went from 46FPS to about 50FPS. And that's with the 4690K overclocked to 4.5GHz, just like my FX-8350. What a farce. Paying extra for the Intel CPU was a rip off, even though I got it for $229 on special. To make matters worse, when I transcode and rip CDs/DVDs and otherwise run multiple tasks, the Intel chip runs out of threads way earlier than the 8 core FX, which is just pathetic. And no, I wasn't about to spend over $300 to get a Core i7, which still only has 4 real cores and hyperthreading.I'm still using the i5 4690K, but I might just give it to my father-in-law at some point as a upgrade for his ancient Core2Duo rig. I'm already starting to feel dirty using this overpriced Intel processor.
chizow - Thursday, January 22, 2015 - link
That's probably because you're using a trash AMD GPU too.chizow - Thursday, January 22, 2015 - link
Oh and please forgive me if I don't buy your BS, when virtually every site that has tested that game shows massive gains from faster CPU. As usual, you're probably doing it wrong or more likely, GPU bound with something from AMD that was as slow as your 8350.https://www.google.com/search?q=company+of+heroes+...
silverblue - Thursday, January 22, 2015 - link
You mean this article, don't you?http://www.techspot.com/review/689-company-of-hero...
The Titan bottlenecks the 4770K but only does so to the 8350 at 4.5GHz. This may explain why anubis44 isn't noticing better performance - and that he could downclock his i5 and still get the same performance, teehee - however I must point out that CoH2 doesn't appear to use more than three CPU cores, so i5s and i7s are wasted in general. FX CPUs aren't really optimised for considering they used ICC to compile the game. I wonder how core parking would affect the FX results? The game also doesn't support multiple GPUs so this really isn't exactly a great game to extract performance data from.
Crunchy005 - Wednesday, January 21, 2015 - link
Love the rage here on both sides. Obviously chizow is a huge nvidia fan boy, although he denies that fact. And there are plenty of AMD fanboys. Fan boyishness aside AMD's graphics hards were top since the 780ti which was nvidia attempting to compete with the new top r9's."Mantle was a dud" - chizow. Mantle was a nice improvement on performance when it came out by reducing CPU overhead and lead to Nvidia following suite.
http://www.extremetech.com/gaming/175881-amd-mantl...
Here is an article from mid 2014 showing top recommended GPUs:
http://www.pcmag.com/article2/0,2817,2422133,00.as...
Funny how nvidia is barely there. AMD was the better choice power to performance, you can't compare and throw out the AMD competition when they are older architectures than the new Nvidia 9xx's(of course these are better). Just wait for the new R9 3xx's which are rumored to be using HBM memory to hugely improve memory bandwidth something Nvidia also says they are looking into, this should also allow for some nice performance gains as well. But hey as soon as those come out at a later date nvidia sucks so why would anyone ever buy it, it has never won (as seen from @chizow's perspective of what AMD currently is). I would also like to quote you here "Nah, I unapologetically buy what's best, if that were AMD, I'd buy AMD. But they haven't been the best, not in a long time."
And to finish off AMD's HSA architecture shows a lot of promise, although not entirely relevant with current software but they are several years ahead of intel in this field. The kaveri destroyed the i5 here with HSA.
http://wccftech.com/amd-kaveri-i54670k-benchmarks-...
frenchy_2001 - Wednesday, January 21, 2015 - link
The problem in the discussion we are having here is that people are talking about 2 different things really.The basics on how good a product is comes down to that catch phrase: "There are no bad products, there are only bad prices." AMD has internalized that and prices their product competitively, so for a perfs/$, they are usually competitive if not better than their competition (either Nvidia or Intel). This is great for consummers, as this keeps price pressure on the products and keep the market competitive in price.
The problem for AMD, is that they are not making money. If both nvidia and AMD sell $250 GPU, but it costs $120 to make for one (Nvidia, 55% gross margin, intel is similar in CPU) and $200 for the other (AMD, 29% gross margin), then one company is not as good as the other and will not be profitable. This can be acceptable in the short term, either to buy market share (as intel is trying in mobile) or to get over a bad product until your next refresh, but this depends on having the financials to support it and invest in RnD to develop new, more profitable products. Both Nvidia and Intel have done it, but both have come out stronger in the next round. AMD has been in that mode for years. They bet the farm on buying ATI and they are still paying for it. This cost them their fab, as those had been increasingly expensive to maintain (only a handful of companies have competitive fabs. Even IBM divested theirs recently). This has lead to intel leading in process (currently 14nm against 28nm). In both GPU and CPU, we can also see that they missed the design shift their competitors went through: intel pushed toward lower power since the first Core architecture and has continued to push lower with each iteration (15W -> 10W -> 8W -> 4.5W...). Similarly, while AMD was creating the biggest and most powerful GPU ever (R9 290X), Nvidia shifted towards more and more efficient architecture, culminating with Maxwell recently.
AMD is in a really bad place: they are out-designed in both market and out-fabbed in CPU, with no cash reserves and a mountain of debt. Their hope would be new architecture in both markets, which is long and costly to develop and new process nodes at their suppliers, which is out of their hand. Their advantage, heterogeneous computing, depends on software, a domain they have dropped the ball more often than not and usually rely on third party development.
Basically, unless they change their mode of operation drastically, they cannot really hope to beat their competition substantially in either of their core market.