This afternoon, AMD announced their earnings for the fourth quarter of 2017. AMD ended the 2017 fiscal year on a high note, with earnings that beat their initial estimates. For the quarter, revenues were up 34% from a year ago to $1.48 billion, and AMD was able to maintain the 35% gross margin they achieved last quarter as well, which is right where they need to be for profitability. Operating income for the quarter was $82 million, up from an operating loss of $3 million a year ago. Net income was $61 million, once again compared to a net loss of $51 million a year ago. This resulted in earnings per share of $0.06.

AMD Q4 2017 Financial Results (GAAP)
  Q4'2017 Q3'2017 Q4'2016
Revenue $1480M $1643M $1106M
Gross Margin 35% 35% 32%
Operating Income +$82M +$126M -$3M
Net Income +$61M +$71M -$51M
Earnings Per Share +$0.06 +$0.07 -$0.06

AMD also reports non-GAAP results, which are generally there to show the underlying business performance when they have large write downs, but this quarter AMD’s non-GAAP results closely mirror the GAAP performance, but with no wafer restructuring or other large expenses, the non-GAAP results for this quarter are mainly excluding stock-based compensation, which was $21 million for the quarter. In terms of non-GAAP, operating income was $103 million, net income was $88 million, and earnings per share were $0.08.

For the full year, AMD had revenues of $5.53 billion, which was up 25% from 2016, with an overall gross margin of 34%. Operating income for the year was $204 million, compared to an operating loss of $372 million the year before. Net income for the company for the full year was $43 million, compared to a $497 million loss in 2016.

The bulk of the growth from AMD is unsurprisingly from their Computing and Graphics segment, which has seen somewhat of a perfect storm, with the release of the well-received Ryzen CPU lineup this year, along with a cryptocurrency market which is currently absorbing every GPU it can get its hands on. Thanks to new product releases in both the CPU and GPU from AMD, Computing and Graphics had revenue for the quarter of $958 million, which is up 60% from a year ago. This segment had an operating income of $85 million, up from a net loss of $21 million a year ago.

AMD Q4 2017 Computing and Graphics
  Q4'2017 Q3'2017 Q4'2016
Revenue $958M $819M $600M
Operating Income +$85M +$70M -$21M

Enterprise, Embedded, and Semi-Custom had segment revenue for the quarter of $522 million, which is up 3% from a year ago, which AMD attributes to server revenue. The segment had an operating income of $19 million, down from $47 million a year ago.

AMD Q4 2017 Enterprise, Embedded, and Semi-Custom
  Q4'2017 Q3'2017 Q4'2016
Revenue $522M $824M $506M
Operating Income $19M $84M $47M

All Other had an operating loss of $22 million, which is an improvement from the $29 million loss in Q4 2016.

AMD is expecting revenues of $1.55 billion for Q1 2018, plus or minus $50 million.

2018 looks to be an exciting year for AMD, after their first really successful year in a long time. AMD is expecting to see Ryzen Mobile designs from all the major PC OEMs soon, which should help get it into the hands of more customers (and reviewers!) and the agreement to build a GPU for Intel to integrated on their own CPU is an interesting way to get Radeon into the hands of more people.

Source: AMD Investor Relations

 

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  • boozed - Wednesday, January 31, 2018 - link

    It was my understanding that the use of GPUs is driven by the development of ASIC-resistant POW algorithms. Reply
  • jjj - Wednesday, January 31, 2018 - link

    The higher prices are not their doing, they sell at normal prices and others are pushing prices up, they have no control over that as it would be illegal. Not that GPU growth is just mining as Vega ramped in Q4, the Intel part barely started shipping and Vega laptop is yet to be launched so they actually have room to grow. Reply
  • haukionkannel - Wednesday, January 31, 2018 - link

    Just so. They only good thing considering Nvidia and AMD is that everything They make goes to the market. But Profit goes to shops that sell those cards in much bigger price than They do pay to Nvidia and amd. So shops has increased their margins because They can... Reply
  • ABR - Wednesday, January 31, 2018 - link

    Why are AMD and nVidia afraid or unwilling to raise their wholesale prices? Reply
  • Valantar - Wednesday, January 31, 2018 - link

    ...because it would inevitably come back to bite them once retail prices swing back. Retailers and distributors are much higher-risk businesses than manufacturing, and normally have far tighter margins. After all, AMD reports their gross margin to be 34% (which they need to pay for R&D), while retail margins for GPUs and other hardware is typically in the low-to-mid single digit percent range (retailers mostly survive off of scale and sale of high-margin accessories, which is why it's so damn hard to find good, cheap USB cables and the like). As such, there's a very, very tight limit on what retailers are willing/able to pay, as they would then be taking the risk of losing very significant amounts of money per product sold if prices suddenly returned to MSRP.

    As a hypothetical example, let's say a reference RX 580 8GB has an MSRP of $230 before taxes, of which 10% margin (of the retail price) is factored in for both the retailer and distributor. A further 20% goes to the AIB partner. That means that AMD is charging the AIB partner $138 for the card. At a 34% gross margin, AMD then makes $47 per card sold. If AMD increases their price to $200 (a 44% increase), they make $109 per GPU, a margin of 54%. That's a significant increase, sure. But unless the AIB partners, distributors and retailers agree to take on more risk (by buying more expensive stock) while _lowering_ their margins, it also pushes the retail price to $333 - an increase of 60%. Then retailers and distributors start pushing their margins, as by the generally accepted logic they should get more rewards from taking higher risks (i.e. they should have higher margins as an incentive to take on more expensive stock). Suddenly the price peaks past $400, 500, or more - and AMD's gains are still quite small. Should AMD then continue raising prices, to "get more back" from the higher retail prices? This quickly turns into a feedback loop.

    AIB partners, distributors and retailers need stability. They stop distributing parts if they lose that, as they know how tenuous this balance can be. It's that simple.
    Reply
  • sonicmerlin - Friday, February 02, 2018 - link

    That makes no sense. Why would amd continue raising wholesale prices? They’re not mindless drones in a feedback loop. They could raise it once and leave it there. The retailers can do whatever the heck they want. If demand drops off then amd could lower their prices. Reply
  • Alistair - Wednesday, January 31, 2018 - link

    Anyone look at Samsung's profits? More profit is made off the memory in the RX 580 than the whole card it seems. Reply
  • darkich - Wednesday, January 31, 2018 - link

    Acrually dedicated gaming market is irrelevant for Samsung..huge majority of their memory business is the general usage memory modules(mobile phones, laptops and servers ) Reply
  • Norman Foster - Wednesday, January 31, 2018 - link

    AMD results beat estimates. Encouraging outlook for 2018. http://alph.st/b3504af1 Reply
  • webdoctors - Wednesday, January 31, 2018 - link

    Although only a small profit at least they didn't lose money. Ideally they can scale up, because if interest rates rise they'll be in trouble. Their 1+B debt would take 20+ years to pay off at this rate.

    Maybe start marketing their own products like when they bought Seamicro.
    Reply

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