Today AMD released their Q1 FY 2015 financial results, and the company reported revenue of $1.03 billion for the quarter. This is a 16.9% decrease as compared to Q4 2014, and a 26.4% decrease from the $1.40 billion recorded in Q1 2014. Operating income based on GAAP numbers was an operating loss of $137 million, which is a substantial decrease in loss as compared to Q4 2014, where they had an operating loss of $330 million, however in Q1 2014 they had a small operating income of $49 million, so although they have improved quarter-over-quarter, that is a significant reduction year-over-year. Net loss for the quarter was $180 million, or $0.23 per share, which once again is better than Q4 2014 where there was a $364 million ($0.47/share) loss, but much worse than the $20 million ($0.03/share) loss in Q1 2014.

AMD Q1 2015 Financial Results (GAAP)
  Q1'2015 Q4'2014 Q1'2014
Revenue $1.03B $1.24B $1.40B
Gross Margin 32% 29% 35%
Operating Income -$137M -$330M $49M
Net Income -$180M -$364M -$20M
Earnings Per Share -$0.23 -$0.47 -$0.03M

Part of these losses are due to the ongoing restructuring at AMD, which has contributed heavily to these numbers. One of the new restructuring fees is due to the exit from the Seamicro branded dense server business, which has cost them an additional $75 million this quarter, including $7 million in cash. Due to these hits, AMD also provides Non-GAAP results which exclude these numbers. On a Non-GAAP basis, AMD’s operating loss is just $30 million, however that is still down significantly from the $89 million operating income in Q1 2014, and the $52 million operating income from last quarter. Net loss on a Non-GAAP basis is $73 million, or $0.09 per share. This is a decline from Q4 2014 where there was a net income of $18 million ($0.02/share) and Q1 2014 where they were able to achieve a net income of $35 million ($0.05/share).

AMD Q1 2015 Financial Results (Non-GAAP)
  Q1'2015 Q4'2014 Q1'2014
Revenue $1.03B $1.24B $1.40B
Gross Margin 32% 34% 35%
Operating Income -$30M $52M $89M
Net Income -$73M $18M $35M
Earnings Per Share -$0.09 $0.02 $0.05M

AMD has also entered into a fifth amendment of their agreement with GlobalFoundries, and AMD is expecting to purchase about $1 billion in wafers in 2015.

Breaking down their product segments, the Computing and Graphics segment had a 20% decline in revenue quarter-over-quarter, and a 38% decrease year-over-year, with Q1 having net revenues of $532 million. The quarterly decrease was due to lower desktop and notebook processor sales, whereas the yearly decrease was due to lower desktop processor sales and GPU channel sales. The division had an operating loss of $75 million for the quarter, which is a significant change from the $56 million loss last quarter and the $3 million income in Q1 2014. The loss was partially offset by lower operating expenses, but clearly more work is needed. AMD is hoping for better success with their new APU, Carrizo, which they are expecting to deliver double digit performance increases and much better energy efficiency compared to Kaveri, which is the current APU.

AMD Q1 2015 Computing and Graphics
  Q1'2015 Q4'2014 Q1'2014
Revenue $532M $662M $861M
Operating Income -$75M -$56M $3M

The Enterprise, Embedded and Semi-Custom segment had a year-over-year revenue decrease of 7%, and a quarter-over-quarter decrease of 14%, with Q1 2015 coming in at $498 million. The quarterly drop is due to a seasonal decrease in semi-custom SoC sales (read: Consoles had a ramp up for the holidays and are now back to lower sales) and the yearly decrease is due to lower numbers of server processors being sold. However this segment did have an operating income to report of $45 million for the quarter, but this is down from the $109 million in Q4 2014 and $85 million in Q1 2014.

AMD Q1 2015 Enterprise, Embedded and Semi-Custom
  Q1'2015 Q4'2014 Q1'2014
Revenue $498M $577M $536M
Operating Income $45M $109M $85M

The “All Other” segment had an operating loss of $107 million. As compared to Q1 2014, this is $68 million more operating loss, which is primarily due to the $75 million hit for exiting the dense server business. In Q4 2014 this segment had a $383 million loss.

For Q2, AMD is forecasting revenue being down an additional 3%, plus or minus 3%, and non-GAAP Gross Margin to remain flat at 32%.

AMD is certainly not in a great position right now, and the new CEO Dr. Lisa Su has some work to do in order to get AMD back to a financially viable state. Part of that is diversifying revenues, especially with the PC market slowing again. AMD has not had a significant product launch in a few quarters, which has not helped either.

Source: AMD Investor Relations

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  • casperes1996 - Thursday, April 16, 2015 - link

    Do you see a 14nm GPU as being at all likely this year? I doubt you can get high performance GPUs down to that fab node this year. Well, no, I don't doubt it being possible, but I doubt anyone will. AMD are taking over Apple desktop parts, and considering that Macs are still a growing business, even with the PC industry in general declining, this is brilliant for AMD, but they have to get into the laptops, since that's where most the growth is. They won't however get into the laptops because of power consumption and heat. Only the high-end rMBP even uses a dedicated GPU, and if AMD can't improve their perf/watt drastically, Nvidia will continue to be the GPU used in future models. This is what they have to improve upon if you ask me. Now a die shrink would be absolutely brilliant for this, and if they can rival Nvidia (not even outperform, just rival) I think Apple will be happy to use AMD parts, since Apple also has an interest in keeping the market competitive.
  • jjj - Thursday, April 16, 2015 - link

    I don't know if they will go 14nm GPUs this year but it seems doable if they chose to. Medium term it's likely that Nvidia will be more efficient but at least AMD could have a few months head start on 14nm and that might help them a bit.
    Winning more of Apple's GPU business doesn't have much relevance from a financial perspective and is slightly positive from a marketing perspective. Apple is not that big in PC and more importantly the OEM business in general is low margins. Plus AMD likely would have to offer very good pricing to win Apple.
    In server, in pro , in high end gaming margins are nice. Even bellow high end gaming margins are good so all those segments are what matters.
    If they could get an APU in a Macbook that would be great for them even if they don't make money from it, it would greatly improve adoption at other OEMs but remains to be seen what the new cores have to offer next year.
    Ofc we don't have much of a clue when Nvidia goes for a shrink but they got no reason ,for now, to rush it and it doesn't seem like it will be this year.
    For AMD what really matters is the new core, if that's a dud, i have no idea how they survive.
  • casperes1996 - Saturday, April 18, 2015 - link

    I think you're underplaying the marketting relevance. I think it'd have much greater worth than you're making it seem. Look at how much they bragged about being the GPU vendor for the Mac Pro, which isn't exactly Apple's best selling machine, and could hardly have made very much money. They wouldn't have played that card so much if it weren't a big marketting plus. Or perhaps they would, considering looking to AMD for good business strategies probably isn't the greatest idea. Anyhow, I'm quite certain it would still be a very good marketing tool.
    An APU I don't see probable at all though. Apple isn't going to change their CPU vendor anytime soon. It's Intel x86 cores only for the foreseeable future. Writing OS X for AMD chips, whilst certainly not as hard as going from POWER to x86, would still require a lot. And way more than it's worth... Especially since it at the moment is worth nothing. Oh, and again, PC is shrinking, Apple is not. So whilst they're still fair from being a market leader, they're undeniably a bigger and bigger share of the market. And what Apple demands of the hardware they chose is also what the other OEMs either want, or will want. The 2-in-1 route so popular with most OEMs requires similar characteristics from the components as a super thin MacBook. Improving the efficiency of their GPUs will also improve their APU designs, making them better fits for low-power devices, and GPUs are of growing importance, so if they can leverage their GPU department well enough, they might have a better shot at taking that market than Intel (marketting aside). Problem is that Intel is already moving faster.

    14nm. Doable, yes. Will they? I don't think so.
  • nunya112 - Friday, April 17, 2015 - link

    Q2 looks "soft" LMFAO the Nasdaq news team said quote "Tanking" lol
  • chizow - Friday, April 17, 2015 - link

    Yep, the market is punishing AMD heavily on this news, down 14% in overnight and early trading. Will buoy again on ANY news of potential buyout as investors are looking for any signs of respite.
  • Novacius - Thursday, April 16, 2015 - link

    I hope they don't go bankrupt before they can launch K12 and Zen. I really think those will improve the situation if AMD can make it that far.
  • Nagorak - Thursday, April 16, 2015 - link

    Yeah, but if they do make it that far, those processors are basically make or break. The construction machinery cores were a real disaster for AMD. Performance never was competitive with Intel, and frankly they didn't even outperform their previous parts. In retrospect, they probably should have tried to come up with a crash course to a new architecture, rather than try to refine those cores.
  • SaberKOG91 - Thursday, April 16, 2015 - link

    Well if you look at GAAP, they went from $1.6 billion in expenses Q4 to $1.2 billion in Q1. Non-GAAP shows a reduction of $100 million. So, I'd say Lisa Su has done a lot to reduce operating expenses. Especially in light of the poor performance in consumer markets. Although enterprise (etc) seems to be doing pretty well, considering.
  • melgross - Thursday, April 16, 2015 - link

    You can't keep reducing expenses. This is a misunderstanding I read often. Once you go below a given level you lose competence in a number of areas.

    A major problem for them is that as sales continue to fall, large organizations prefer to not do business with them, that reduces sales further. Blackberry is undergoing this problem too, with about the same sales dollars coming in. Apple had that problem in the late mid 1990's.

    But few companies come back from this. I hope AMD does, but it's looking doubtful.
  • SaberKOG91 - Thursday, April 16, 2015 - link

    You can drastically reduce expenses in the short-run. Long-term, AMD will need to obviously begin increasing their expenditures again. But in their current position, they need to start turning a profit. They are likely to grow in emerging markets, allowing this gap to close from one direction, but will still need to turn an overall profit to encourage investment. This will also require them to continue to reduce operating costs, closing this gap from the other direction. As much as it saddens me to see it, AMD must either find a way to make their consumer segment more profitable, offset the short-run losses with enterprise revenues, or continue to reduce operating costs. They simply do not have the investor backing to operate in the negative for an extended period.

    I see the stories of AMD and Blackberry as very similar. They thrived for many years in high profit niche markets, but failed to expand into other less profitable areas. This lack of diversification ultimately led to their inability to quickly adapt to changes in later iterations of their ecosystems. Even Intel stumbled in areas like mobile due to their own complacency during the same time period. They have only been able to survive because of strong investor backing and being able to sustain significant short-run losses in some segments as the result of a surplus of available profits in other core areas.

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