AMD enjoyed greater profits in 2010


— 10:56 AM on January 21, 2011

The numbers are in, and it looks like AMD didn't lose a dime in 2010 overall. As a matter of fact, the company enjoyed increases in revenue, net income, and gross margin, with the year's final quarter yielding $375 million in profits on $1.65 billion in revenue. Not too shabby for a company that struggled to turn a profit for much of the past decade.

AMD's fourth-quarter results are pretty self-explanatory: revenue and gross margin haven't changed much, while net income has gone up quite a bit sequentially. For those with short memories, that $1.18 billion profit AMD posted for the fourth quarter of 2009 was almost entirely due to the Intel settlement.

  Q4 2009 Q3 2010 Q4 2010
Revenue $1.65 billion $1.62 billion $1.65 billion
Net income $1.18 billion -$118 million $375 million
Gross margin  45%  46% 45%

AMD says revenue for its Computing Solutions business was flat in the fourth quarter. Average CPU prices didn't budge from Q4 2009 and dipped compared to Q3 '10, allegedly due to price drops on the notebook and server fronts. On the graphics side of things, AMD says revenue was flat year-over-year but climbed 9% between the third and fourth quarters, thanks to a combination of higher discrete GPU prices and a "seasonally strong increase in game console revenue." Hello, Christmas console sales! (Keep in mind that both the Wii and the Xbox 360 feature AMD GPUs.)

Looking at 2010 as a whole, AMD clearly did much better than in 2008 or 2009:

  2008 2009 2010
Revenue $5.81 billion $5.40 billion $6.49 billion
Net income -$3.10 billion $304 million $471 million
Gross margin 40% 42% 46%

AMD isn't even coming close to Intel's eye-popping gross margins, though. Intel's margin for 2010 was 66%, a solid 20 points above AMD's. I guess that's what happens when one company has a monopoly on high-end processors... and the other one is AMD.

For the ongoing quarter, AMD is forecasting "flat to slightly down" revenue. No big shock there, since Q1 always tends to be a little bit slower than the Christmas-shopping-laden fourth quarter, at least in this industry.

   
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