AMD announced their first quarter results from fiscal year 2016. AMD has certainly been struggling of late, but CEO Lisa Su made the announcement that AMD had made a joint-venture with THATIC for x86 processor development for the Chinese market. AMD will receive $52 million immediately and the total agreement is for $293 million, plus future royalties. This is a significant agreement for AMD, and licensing their IP is one of the ways they hope to get back to profitability.

Looking at the overall quarter, AMD had revenues of $832 million, which is down a significant 19% from last year. But the good news for AMD is that their gross margin is up to 32%, an increase over last quarter and having it come back to the same level as a year ago. AMD reported an operating loss of $68 million for the quarter, which is an improvement over the $137 million loss last year. The net loss for the quarter was $109 million, or $0.14 per share, which is once again an improvement over last year’s $180 million loss, or $0.23 per share.

AMD Q1 2016 Financial Results (GAAP)
  Q1'2016 Q4'2015 Q1'2015
Revenue $832M $958M $1030M
Gross Margin 32% 30% 32%
Operating Income -$68M -$49M -$137M
Net Income -$109M -$102M -$180M
Earnings Per Share -$0.14 -$0.13 -$0.23

AMD also reports non-GAAP results, which exclude restructuring costs and stock-based compensation. On a non-GAAP basis, AMD had an operating loss of $55 million, compared to a $30 million loss last year where they had high restructuring charges. Gross margin came in at the same 32%, and there was a net loss of $96 million, or $0.12 per share, compared to a net loss of $73 million, or $0.09 per share last year.

AMD Q1 2016 Financial Results (Non-GAAP)
  Q1'2016 Q4'2015 Q1'2015
Revenue $832M $958M $1030M
Gross Margin 32% 30% 32%
Operating Income -$55M -$39M -$30M
Net Income -$96M -$79M -$73M
Earnings Per Share -$0.12 -$0.10 -$0.09

The Computing and Graphics segment is still the largest part of AMD, and for this quarter they had revenue of $460 million. That is a drop sequentially of 2%, and a year-over-year drop of 14%, but AMD improved their operating loss for this segment, with a loss of $70 million for the quarter. This is an improvement over the $99 million loss last quarter, and an improvement over the $75 million loss a year ago. The revenue drop from last quarter was attributed to a drop in desktop processor sales, and the annual drop is due to a decline in notebook processor sales. Lowered operating expenses were the reason for the better operating loss levels, but both desktop and notebook processors are seeing a decrease in average selling price for AMD. GPU sales also dropped average selling price compared to last quarter, but increase year-over-year with higher channel and professional GPU prices.

AMD Q1 2016 Computing and Graphics
  Q1'2016 Q4'2015 Q1'2015
Revenue $460M $470M $532M
Operating Income -$70M -$99M -$75M

The Enterprise, Embedded, and Semi-Custom segment had revenue of $372 million for the first quarter of this year, which is down 24% from last quarter and 25% from last year. This group is profitable though, although just slightly this quarter, with an operating income of $16 million for the quarter. This compares to a $45 million income in Q1 2015 though, which is a big drop when AMD’s already cutting it pretty close. AMD attributes the revenue drop to lower sales of semi-custom SoCs, of which a big market is consoles. It makes sense that as the consoles mature, sales will trail off, but AMD did well to get inside both the PlayStation 4 and Xbox One on this round of consoles, since both have been selling well compared to the previous generation. The decrease in operating income due to lower sales and higher R&D spending, but was offset by a $7 million IP licensing deal.

AMD Q4 2015 Enterprise, Embedded, and Semi-Custom
  Q1'2016 Q4'2015 Q1'2015
Revenue $372M $488M $498M
Operating Income $16M $59M $45M

The All Other category had an operating loss of $14 million for the quarter, compared to a $107 million loss last year. That is because AMD had some large restructuring charges on the books last year.

Unsurprisingly, AMD is still sorting out their future, and their results reflect that. They have had a pretty large processing disadvantage compared to Intel for a long time now, and later this year they will finally start shipping on 14 nm nodes, but it is the deals for IP licensing which bring in constant revenue without the associated costs of revenue which are the big news this quarter. With rumours of updated consoles, they may also get a bump in their semi-custom SoC if and when that happens. Looking to next quarter, AMD is expecting revenues to come in 15% higher, plus or minus 3%.

Source: AMD Investor Relations

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  • jasonelmore - Thursday, April 21, 2016 - link

    So what does this mean?

    Will china make a x86 cpu using AMD's cores? and are they allowed to sell it to consumers?

    Also, is sony stupid enough to fragment their user-base.
  • yannigr2 - Friday, April 22, 2016 - link

    Intel's Sofia is x86.

    Intel was targeting mobile devices, so they made a deal with China about small x86 cores.
    AMD is targeting servers, so they made a deal with China about big x86 cores.

    Both agreements will make many Americans unhappy, on the other hand both agreements will do Intel good, even if Intel doesn't like this deal, because they will help the x86 platform to maintain a market share against ARM in the China market.
  • BurntMyBacon - Friday, April 22, 2016 - link

    I thought they had to go to Intel one way or the other to get permission to develop a chip compatible with the x86 ISA. There seem to be some details missing here. Is this THATIC paying AMD for x86 IP and then designing their own chip? Seems to run afoul of Intel's licensing scheme and they have made an issue of this in the past. Alternately, this could be THATIC paying AMD to design the chip, perhaps with some of their IP, and then paying a licensing and royalty fee to allow them to fabricate it at Global Foundries (who are already allowed to fabricate x86). This would be a lot like the route Microsoft went with the XBOX 360 (XBOX One?).
  • yannigr2 - Friday, April 22, 2016 - link

    About Sony. The fragmentation will not affect the consumers much. Both consoles are PCs, and games will be published for both consoles at the same time. Old games could get a premium patch to run on the newer model with better visuals or performance. Last year we had PS3 and PS4, Xbox 360 and Xbox 1. Next year we will have PS4 and PS4K(?), Xbox 1 and Xbox 1.5(?). So two models in the market from both companies. One cheap, one more expensive. But this time all consoles will be x86 PCs with AMD hardware inside, making the production of games much easier and cheaper.
  • Michael Bay - Friday, April 22, 2016 - link

    The maint marketing thrust with consoles for endusers and developers was always, ALWAYS simplicity. You buy this box and then only games.
    Now there are two boxes, so consumer is standing in the aisles dumbfounded, and developer has to test and adjust content for two systems.

    Then there will be more boxes.
  • nikon133 - Tuesday, April 26, 2016 - link

    Well... many gamers were complaining that consoles are getting long in the tooth, and dragging whole gaming industry down.

    Looks like now we'll have complains that consoles are not good investment anymore because they will have shorter shelf life. Hard to please everyone :)

    But seriously. PS4 will be at least 3 years old when PS4+ actually gets released. It will be also cheaper that 4+ and with lots of existing games that will not offer any benefits to 4+ users. Well, maybe more stable frame-rate. Anyway, I think it will keep selling, and a lot of time will pass before 4+ reaches 4's user base... and in that time, I would expect devs to focus on console with larger user base.

    I expect original PS4 to have at least 6 years of being "alpha" console from devs' point of view. 4+ owners will b neglected, at least for couple of years - they will be getting higher frame-rates and eventually higher output res (when original PS4 is forced to fall back to 900p or 720p in order to keep framerate) but I will be surprised to see any deeper differences - as in, redone assets, higher res textures, more detailed geometry and such. Also, Sony requires that games play identically - so no extra content for 4+.
  • Wreckage - Friday, April 22, 2016 - link

    Looks like their graphics division is dragging them down. Those are some pretty steep losses.
  • at80eighty - Friday, April 22, 2016 - link

    their losses are like Viagra for you
  • Wreckage - Friday, April 22, 2016 - link

    I should see a doctor because it's lasting more than 4 quarters ;-p
  • at80eighty - Saturday, April 23, 2016 - link

    ok, i will admit, that was actually funny

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