AMD Announces Q3 2016 Financial Results
by Brett Howse on October 20, 2016 11:35 PM EST- Posted in
- CPUs
- AMD
- Financial Results
Today AMD announced their third quarter earnings for the fiscal year 2016. Revenue was up to $1.307 billion, up 23% from a year ago. However their operating income and net income were not quite so lucky, with AMD showing an operating loss of $293 million for the quarter, compared to a $158 million operating loss a year ago, and net AMD showed a loss of $406 million, or $0.50 per share, compared to a net loss of $197 million, or $0.25 per share, a year ago.
| AMD Q3 2016 Financial Results (GAAP) | |||
| Q3'2016 | Q2'2016 | Q3'2015 | |
| Revenue | $1307M | $1027M | $1061M |
| Gross Margin | 5% | 31% | 23% |
| Operating Income | -$293M | -$8M | -$158M |
| Net Income | -$406M | +$69M | -$197M |
| Earnings Per Share | -$0.50 | $0.08 | -$0.25 |
AMD took a charge of $340 million this quarter for their sixth amendment to the wafer supply agreement with GlobalFoundries. This has been excluded in their Non-GAAP measures to show the core business, where they had the same $1.307 billion revenue, but showed an operating income of $70 million for the quarter, compared to an operating loss of $97 million a year ago. Non-GAAP net income for the quarter was $27 million, compared to a $136 million loss in Q3 2015.
| AMD Q3 2016 Financial Results (Non-GAAP) | |||
| Q3'2016 | Q2'2016 | Q3'2015 | |
| Revenue | $1307M | $1027M | $1061M |
| Gross Margin | 31% | 31% | 23% |
| Operating Income | $70M | $3M | -$97M |
| Net Income | $27M | -$40M | -$136M |
| Earnings Per Share | $0.03 | -$0.05 | -$0.17 |
Thanks to the charge, gross margin in GAAP terms was an abysmal 5% for the quarter, but Non-GAAP was 31%.
AMD’s Computing and Graphics segment had revenue of $472 million this quarter, which is up 11% from Q3 2015. Increased sales of GPUs are attributed to the gain, but the gain was offset by a drop in desktop processor sales, though they have seen an increase in sales of notebook processors. This segment continues to be unprofitable, having an operating loss of $66 million this quarter, but that is much better than the $181 million operating loss a year ago. Once again, GPU revenue has helped here tremendously. GPU average selling price (ASP) increased with higher channel and professional graphics ASPs. CPU ASP was flat year-over-year.
| AMD Q3 2016 Computing and Graphics | |||||
| Q3'2016 | Q2'2016 | Q3'2015 | |||
| Revenue | $472M | $435M | $424M | ||
| Operating Income | -$66M | -$81M | -$181M | ||
Enterprise, Embedded, and Semi-Custom continues to grow, and has easily surpassed the Computing and Graphics division, with revenues of $835 million, which is up 31% year-over-year. Semi-custom SoC sales continue to be the bright spot for AMD, with AMD have locked up both current generation consoles in the Xbox One, and PlayStation 4, and their refreshes in the Xbox One S and PlayStation 4 Pro, as well as the upcoming Xbox Project Scorpio. Best of all for AMD, this segment continues to be profitable, with an operating income of $136 million this quarter, up from $84 million a year ago.
| AMD Q3 2016 Enterprise, Embedded, and Semi-Custom | |||||
| Q3'2016 | Q2'2016 | Q3'2015 | |||
| Revenue | $835M | $592M | $637M | ||
| Operating Income | $136M | $84M | $84M | ||
AMD plunked the wafer agreement charge right into their All Other category, which had an operating loss of $363 million this quarter, compared to an $11 million loss last quarter, and a $61 million loss in Q3 2015.
AMD has seen success with its Polaris architecture in the GPU space, and they hope to see some success with their upcoming Zen CPU architecture, with their Summit Ridge desktop processor and a 32-core, 64-thread server product code named Naples.
Looking forward to next quarter, AMD expects revenues to decrease 18%, plus or minus 3%.
Source: AMD Investor Relations
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Yojimbo - Friday, October 21, 2016 - link
That includes the one-time wafer supply agreement charge. It's probably not fair to apply it to only this quarter's revenue from the point of view of assessing their costs.bill.rookard - Friday, October 21, 2016 - link
Yup. But if you go by their non-GAAP numbers that gross margin goes up a lot (31%). They didn't have to take that charge for the wafer supply agreement, they decided to take it and with good reason. They're going to have to take the hit eventually, and it's better to take it now in a strong quarter than to kick it down the road when the future is still somewhat uncertain.All in all, not a bad result.
tamalero - Sunday, October 30, 2016 - link
Most probably has to do with their agreements with Microsoft and SONY.I remember that they were selling the Nintendo chips for the price of nuts.
vladx - Friday, October 21, 2016 - link
Wow 5% Gross Margin, that gotta hurt for the shareholders.Alexvrb - Friday, October 21, 2016 - link
I wish people could read the article before they comment. See bill.rookard's post above. That 5% includes the supply agreement charge. Their fundamentals actually look decent, better than I expected.Hrel - Monday, October 24, 2016 - link
Makes you wonder how long a company can stay in business losing hundreds of millions virtually every single quarter, AMD has been going like this for around 10 years. That's insane.Annabella24 - Wednesday, October 26, 2016 - link
Bored this evening? Don't know where to find a girl for the night? Welcome to https://goo.gl/PSgNLjWarsun - Friday, December 2, 2016 - link
Here are the problems.1.AMD does not check stores.All the stores that they pay to have their products in.Stores are hiding the product.I have gone into stores where they are suppose to have my card on the shelf.But i get there an have to talk to customer service to get that card.Because they wont put it on the show room floor.They where payed to sell the product but wont put it out.This is the first problem.Second is the Employees.Some of them are Intel fanboys if not Nvidia Fanboys.They hide graphics cards as well.So Laptops,graphics cards and AMD prebuilt computers are being hidden in stores.You are losing profits because no one in stores sees your product.How do you fix that?What we have been telling you all this time. ADVERTISE YOUR GOT DAMNED PRODUCT!If people say.Hey! This commercial on cable says AMD is great an Cheaper than Intel and Nvidia.I'll go to the store an buy that.Then you have a DEMAND for your product!!! They cant HIDE the product anymore.It needs to be on the show room floor because of a few commercials 12 times a month on any stations you can get to run it.Mostly on Thursday and Friday.When people are expecting to get the checks.You don't advertise! AT ALL! You know people get payed in the middle and the end of the month.Even Newegg.com and Steam know this.
So they put out sales.So suck it up.Stop standing there saying We tried when you haven't learned the basics of advertisement.Get your foot in the door! Advertise.Check an make sure stores sell your product.If not Fine them.Take them to court.You spent money on this.You don't brush it off.
Warsun - Friday, December 2, 2016 - link
Here are the problems.1.AMD does not check stores.All the stores that they pay to have their products in.Stores are hiding the product.I have gone into stores where they are suppose to have my card on the shelf.But i get there an have to talk to customer service to get that card.Because they wont put it on the show room floor.They where payed to sell the product but wont put it out.This is the first problem.Second is the Employees.Some of them are Intel fanboys if not Nvidia Fanboys.They hide graphics cards as well.So Laptops,graphics cards and AMD prebuilt computers are being hidden in stores.You are losing profits because no one in stores sees your product.How do you fix that?What we have been telling you all this time. ADVERTISE YOUR PRODUCT!If people say.Hey! This commercial on cable says AMD is great an Cheaper than Intel and Nvidia.I'll go to the store an buy that.Then you have a DEMAND for your product!!! They cant HIDE the product anymore.It needs to be on the show room floor because of a few commercials 12 times a month on any stations you can get to run it.Mostly on Thursday and Friday.When people are expecting to get the checks.You don't advertise! AT ALL! You know people get payed in the middle and the end of the month.Even Newegg.com and Steam know this.
So they put out sales.So suck it up.Stop standing there saying We tried when you haven't learned the basics of advertisement.Get your foot in the door! Advertise.Check an make sure stores sell your product.If not Fine them.Take them to court.You spent money on this.You don't brush it off.