This afternoon, AMD announced their fourth quarter earnings for the 2016 fiscal year. 2016 was a challenging year for AMD, as they continue to expand their business away from only focusing on the PC market, and although they still have a long way to go, 2016 was an improvement on 2015. For Q4 AMD had revenues of $1.11 billion, which is up 15% from Q4 2015. Gross margin for the quarter was $351 million, up from $283 million a year ago. As a percentage, AMD’s gross margin was 32%, compared to 30% in Q4 2015. AMD had an operating loss of $3 million for the quarter, compared to a loss of $49 million a year ago, while net loss improved as well, from $102 million in Q4 2015 to $51 million this quarter. This resulted in a loss per share of $0.06, compared to a loss of $0.13 last year. AMD makes note that Q4 2016 was a 14-week quarter, compared to a 13-week quarter for Q3 2016 and Q4 2015.

AMD Q4 2016 Financial Results (GAAP)
  Q4'2016 Q3'2016 Q4'2015
Revenue $1106M $1307M $958M
Gross Margin 32% 5% 30%
Operating Income -$3M -$293M -$49M
Net Income -$51M -$406M -$102M
Earnings Per Share -$0.06 -$0.50 -$0.13

For the full fiscal year, AMD had revenues of $4.27 billion, which is up 7%, but a sixth amendment to their wafer supply agreement hit their margins very hard in 2016. For the full year, AMD had margins of just 23%, which is a drop of 4% compared to 2015. Operating loss was $372 million for the year, compared to $481 million in 2015, and net loss was $497 million, compared to $660 million a year ago. For the full year, AMD had a net per share loss of $0.60, which is an improvement from the $0.84 loss in 2015.

AMD also reports Non-GAAP results, which exclude stock-based compensation, restructuring charges, node transition costs, and wafer agreement charges, to give a look at their core business. On a Non-GAAP basis, AMD had revenues of $1.11 billion, just like their GAAP numbers, but they posted operating income of $26 million for the quarter, compared to an operating loss of $39 million a year ago. Net loss was $8 million, compared to $79 million in Q4 2015, and loss per share was $0.01 compared to $0.10 a year ago.

AMD Q4 2016 Financial Results (Non-GAAP)
  Q4'2016 Q3'2016 Q4'2015
Revenue $1106M $1307M $958M
Gross Margin 32% 31% 30%
Operating Income $26M $70M -$39M
Net Income -$8M $27M -$79M
Earnings Per Share -$0.01 $0.03 -$0.10

AMD attributes their increase in revenue primarily due to increased GPU sales. AMD’s Computing and Graphics segment had revenues for the quarter of $600 million, which is up 28% year-over-year. Polaris seems to be doing quite well, which is great to see. The segment still had an operating loss of $21 million, but that is a big improvement from the operating loss of $99 million a year ago. CPU average selling price fell year-over-year, but GPU average selling price increased year-over-year, thanks to higher desktop and professional graphics pricing. We eagerly await the launch of Ryzen, which AMD showed off last quarter, and expect to hear more about it this quarter.

AMD Q4 2016 Computing and Graphics
  Q4'2016 Q3'2016 Q4'2015
Revenue $600M $472M $470M
Operating Income -$21M -$66M -$99M

AMD branched into Enterprise, Embedded, and Semi-Custom designs and it has proven to be a strong source of revenue for them. With wins in both the Xbox One and PlayStation 4, AMD continues to be the beneficiary of both of those consoles outselling their predecessors. For Q4, this segment had revenue of $506 million, which is up 4% year-over-year, thanks to higher embedded and semi-custom SoC revenue. This segment does have it’s ups and downs annually with consoles peaking and ebbing, but annually it has been a strong market for AMD to branch into. This segment had an operating income of $47 million for the quarter, which is down from $59 million a year ago, which AMD attributes to higher R&D investments this quarter.

AMD Q4 2016 Enterprise, Embedded, and Semi-Custom
  Q4'2016 Q3'2016 Q4'2015
Revenue $506M $835M $488M
Operating Income $47M $136M $59M

Finally, All Other had an operating loss of $29 million, compared to $9 million a year ago. The increased loss is attributed to higher stock-based compensation charges for Q4 2016.

AMD had strong margins for this quarter, and if they are going to have a strong 2017, that needs to be their focus. Ryzen may help as well, depending on how it compares, but Dr. Lisa Su, AMD’s president and CEO, has been slowly but surely bringing AMD back to a point of profitability. Looking ahead, AMD expects revenues to decrease 11% for next quarter, plus or minus 3%, which would put them at an 18% increase in revenue for Q1 2017 compared to Q1 2016, if you pick the mid-point in their target.

Source: AMD Investor Relations

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  • johnpombrio - Wednesday, February 1, 2017 - link

    AMD had another bad year. The third worst in losses, the second worst in revenue. This follows the pattern that AMD has had ever since the disastrous 2012.
    AMD has had a problem with negative cash flow due to its steady losses and decrease its debt load. I was pleasantly surprised to see that AMD manged to have more cash on hand at the end of 2016 than in 2015: $1.264 billion vs $785 million. I had to dig to find out why. In 2016, AMD sold off, err had a "joint venture" with ATVP JV that netted them $351 million in Q2. During 2016, AMD sold $1.47 billion in new stocks and convertible senior notes. That is close to two billion dollars in INCOME to reduce their debt from $2 billion in 2015 to 1.4 billion in 2016 and keep the cash flow positive. This is at the cost of diluting the stock by almost 30% if those convertible notes are, err, converted. Did that affect the stock price? hardly.
    Reply
  • TheJian - Wednesday, February 1, 2017 - link

    BTW margins are good? ROFL 32%? Good is NV/Intel margins ~60%. Can't believe AMD's stock rise on quarter after quarter of losses. Ryzen had better be good or the stock will crash. Reply
  • novastar78 - Wednesday, February 1, 2017 - link

    In speaking with actual people who have actually touched the product it is good, it all depends on how well they execute and create mindshare.

    I woul think that the server market is probably the area they really need to make an impact as it is the area they most liekly stand to make the most profit.
    Reply
  • Achaios - Thursday, February 2, 2017 - link

    Where is that guy who was pushing AMD stock in here and urging everyone and their little sister to buy AMD stock "BECUZ HUGE PROFITS TO CUM MON".

    On the subject of AMD, they are hopeless. Year after year we get the same results: Loss, loss, loss, loss, minus, minus, minus.

    It seems that the folks at AMD are trying to tell us something.
    Reply

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