AMD hosted their quarterly earnings conference call this afternoon to announce their financial results for the quarter ending June 2014. In a similar story to last quarter, AMD has inched closer to profitability yet again. Revenue for the quarter came in at $1.44 billion, an increase of 3% over Q1 2014 and up 24% year-over-year.
| AMD Q2 2014 Financial Results (GAAP in USD) | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| Revenue | $1.44B | $1.40B | $1.16B | ||
| Operating Income | $63M | $49M | -$29M | ||
| Net Income | -$36M | -$20M | -$74M | ||
| Earnings per Share | -$0.05 | -$0.03 | -$0.10 | ||
Once again, gross margins were flat over the preceding quarter at 35%. Operating income for the quarter was $63 million, up from $49 million in Q1, however the GAAP results still ended up with a $36 million net loss. The Non-GAAP numbers come in higher due to the exclusion of $49 million in loss from debt redemption.
Non-GAAP operating income was $67 million, with a net income of $17 million or $0.02 per share which missed analyst’s expectations of $0.03 per share.
| AMD Q2 2014 Financial Results (Non-GAAP in USD) | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| Revenue | $1.44B | $1.40B | $1.16B | ||
| Operating Income | $67M | $66M | -$20M | ||
| Net Income | $17M | $12M | -$65M | ||
| Earnings per Share | $0.02 | $0.02 | -$0.09 | ||
Cash, cash equivalents and marketable securities were $948 million at the end of the quarter. AMD has a target for cash on hand of $600 million minimum with $1 billion as an optimum target, and is within that window. Total debt went up from $2.14 billion to $2.21 billion.
Once again, the Computing Solutions segment of AMD performed poorly, with a revenue decrease of 1% from Q1, and 20% from Q2 2013. AMD attributes this to a decrease in microprocessor unit shipments. However higher margins and an increase average selling price (ASP) meant that the increased the operating income to $9 million for the quarter, up from the $3 million loss last quarter, and also up from the $2 million in income at the same time last year.
| AMD Q2 2014 Computing Solutions Division Financial Results | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| Revenue | $669M | $663M | $841M | ||
| Operating Income | $9M | -$3M | $2M | ||
Graphics and Visual Solutions continued its strong performance from last quarter with an increase in revenue of 5% from last quarter, and 141% year-over-year. AMD once again attributes this gain to semi-custom SoC shipments which likely mean Game Console sales. GPU revenue was down both sequentially and year-over-year but slightly offset by an increase in professional graphics and desktop OEM GPUs. Overall operating income for the segment was $82 million, down from $91 million last quarter and up from a breakeven point in Q2 2013. GPU ASP decreased compared to both last quarter and Q2 of last year.
| AMD Q2 2014 Graphics and Visual Solutions Division Financial Results | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| Revenue | $772M | $734M | $320M | ||
| Operating Income | $82M | $91M | $0M | ||
AMD has reorganized its reporting structure for upcoming financial results. As of Q3 2014, the segments will be Computing and Graphics which include desktop and notebook processors, chipsets, and GPUs, and Enterprise, Embedded, and Semi-Custom segment which will be servers, embedded systems, and game consoles.
AMD is expecting a 2% revenue increase plus or minus 3% for the 3rd quarter this year.
AMD still has some work to do in order to get to profitability, but so far 2014 has been a lot easier on them than the last couple of years.
Source: AMD
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eanazag - Friday, July 18, 2014 - link
I agree that their reporting needs a revamp. I would still expect to see their GPU division still being profitable. Their GPU division should actually get some credit from the CPU side, which would make the CPUs look worse. This would really sum up their whole current existence and marketing. People buy the CPUs because the GPUs keep them afloat performance wise.The chipset division needs to be graded financially. They have been sitting on their asses too long. Name an innovation that came from there. They could do more there on the client and server side and make the whole platform more competitive. Intel is spanking them there for no good reason.
icetorch - Friday, July 18, 2014 - link
Hopefully when their next chipset comes out, with their next architecture in 2016, it will be a lot better. Also to note, AM3+ motherboards are getting pretty outdated.StevoLincolnite - Sunday, July 27, 2014 - link
The current 900 series chipset is essentially the exact same as the 800 series chipsets, which in turn were only a minor improvement over the 700 series chipsets.In-fact the 980G is a rebadged 880G chipset and some 960/970G Chipsets are re-badged 860/870G chipsets, IGP and all.
Some OEM's however like Asus re-purposed the 5-6 year old 760G chipset to be AM3+ compatible like with the ASUS M5A78L-M/USB3 motherboard.
AMD has been stupidly lethargic with it's chipset innovation.
Here we are in the middle of 2014 and AMD's chipsets STILL don't support PCI-E 3.0 and USB 3.0 natively, not to mention the lack of Sata 3.2, heck even Sata 3.1, if you wan't those features they are included via secondary chips, which increases board complexity, thus the BoM and hence price and possibly impacting reliability.
Wreckage - Thursday, July 17, 2014 - link
"Total debt went up from $2.14 billion to $2.21 billion."I think this is the real killer for AMD. The interest payments alone on this debt have to be upwards of a $100 million or so a year.
SuperMecha - Friday, July 18, 2014 - link
It's closer $200 million a year.Death666Angel - Friday, July 18, 2014 - link
How do you pay 10% interest on loans these days. That's more than most struggling European countries pay today.ShieTar - Friday, July 18, 2014 - link
Interests are basically the same thing as profits, i.e. money paid to investors instead of workers and suppliers. But usually you don't have to pay taxes before handing out interest payment. So most modern companies are actively trying to pay as much interest as they possibly can, and only keep a little money for the official profits.For AMD: They paid 177M$ of interest in 2013, but in 2009 (when their CPU business was still going stronger) they even paid 439M$ in interest. At the same time, AMD only paid 9M$ of income taxes in 2013, so thats just 5% of the money handed to their investors/creditors.
So really, the interesting result from a financial report are always the EBIT figures (Earnings before interest and taxes), not the largely random net income.
eanazag - Friday, July 18, 2014 - link
Why wouldn't AMD be looked at like a struggling European country? Most of my kids have never seen a day where AMD was profitable.Roland00Address - Friday, July 18, 2014 - link
Wow your revenue went up $400 million but your profits only went up $80 million in the gpu division. Looks like they are not making a lot of margins on those game console chips, what is that, roughly 20%? I know they have to buy the chips from tmsc and gf, but you should barely have any R&D costs since you reused your jaguar and video card design, and those costs should have happened months ago, you are now just printing silicon.CiccioB - Friday, July 18, 2014 - link
The margins on console chips were debated a lot when nvidia took them as an excuse for the fact that they didn't have the chance to enter console market due to lack of an integrated CPU+GPU architecture (whose advantage is only to keep costs low).However, many interpreted those claims only as an excuse with no reference to reality. Many thought that margins were really high, but nvidia could not offer anything (as it couldn't).
Reality is that Sony and MS are not stupid and aimed since day 1 of their R&D for the next-gen consoles at lowering the costs as much as possible. And APUs are a good way to obtain that. And they knew. And so they wanted the APU to cost much less than an architecture with an Intel CPU+nvidia GPU. Both Intel and nvidia could lower their margins enough to create a cheap discrete architecture. But Sony and MS want even lower costs. AMD was there to satisfy both of them.
Whoever think about this could never think that AMD would have high margins. Sony and MS were not surely keen to pay them (discrete architecture would be the best solution then at the same costs).
Someone (like me) said that. But hordes of fanboys just used nvidia statements to prove that AMD was the winner, the best, that was going to have great profits for the next years only based on console chip shippings.
But, as we see, they were wrong. And we still do not know if the future APUs shrinks have to be paid by AMD or MS/Sony.
In the end, though nvidia statements on too much lower margins were a marketing necessity as they had nothing to offer to equal APUs costs, they were not telling bullshit.
My question is: seen the high profits and the fact that this "stream" of cash coming from console chips is now well consolidated (and will be similar for the next quarters) but the company could not make profits, when ever they are?