AMD posts $257M profit, increased gross margin

Looks like AMD doesn’t need juicy Intel settlement money to turn a profit, at least now that it no longer consolidates its financial results with GlobalFoundries’. AMD has posted net income of $257 million on “record” $1.57 billion revenue for 2010’s first quarter.

  Q1 2009 Q4 2009 Q1 2010
Revenue $1.18 billion $1.65 billion $1.57 billion
Net income -$416 million $1.18 billion $257 million
Gross margin  43% 45% 47%

Those results mark a notable improvement over AMD’s $416 million net loss for the first quarter of 2009. The chipmaker continued to string up losses until the fourth quarter of last year, when approximately $1.27 billion dollars of Intel settlement money finally tipped the scales. Because of the terms of that settlement, AMD now gets to stop reporting GlobalFoundries results as its own—and sure enough, Q1 2010 marks the first quarter of GlobalFoundries-free financial reporting.

AMD’s processor and graphics businesses both saw revenue growth compared to Q1 2009: the company quotes a 23% increase for the Computing Solutions unit and 88% for the graphics unit. Those same businesses did see sequential revenue drops of 5% and 3%, respectively, compared to Q4 ’09. (Processor shipments fell sequentially, and AMD raked in less cash on royalties from console sales, although it says higher average CPU prices and a GPU revenue increase largely offset the declines.)

Looking at the ongoing quarter, AMD says it expects revenue will be “down seasonally.” That’s a tad bleaker than Intel’s outlook, which leaves room for both revenue and gross margin increases.

Comments closed
    • OneArmedScissor
    • 13 years ago

    Lard only knows. I would figure they have some sort of a deal worked out as a safeguard, but I’m no lawologist. I’m merely a lolologist.

    • pogsnet
    • 13 years ago
    • MadManOriginal
    • 13 years ago

    The thing that is most worrisome to me about AMD’s future is the fact that they did not retain 51%+ ownership of GF. I don’t fully believe in the egotistical ‘real men have fabs’ statement but with at least 51%+ they could maintain enough control over production to not be limited or be elbowed out by other fabless contracts. But what happens now if there are other users of GF production lines that can pay more than AMD? As long as AMD is reasonably competitive they might be OK because they can pay GF enough but if they aren’t it could be a serious problem.

    • SubSeven
    • 13 years ago

    You don’t know what you are talking about…. there at least 5 reasons why AMD is still in business and they are HP, IBM, Acer, Gateway, Lenovo and thats just to name a few. There are many others. No one wants to see Intel command the market (not even Intel itself).

    • blastdoor
    • 13 years ago

    If you bought AMD at $40 a share, then you definitely don’t have a dollar for every time someone said they’re doomed. If you shorted AMD at $40 a share, then you do.

    There are two reasons AMD is still in business. #1 — German subsidies. #2 — they won their lawsuit with Intel. Take those away and it’s a financial certainty that they would be out of business today. So all I can say is “yay for German subsidies and anti-trust law!” because it would have been a real shame for AMD to have gone out of business.

    • blastdoor
    • 13 years ago

    Price is the entire reason that it was a terrible idea. But maybe my choice of words isn’t the best — maybe I should say it was a terrible deal, not a terrible idea. It would have been a perfectly fine idea at half the price.

    • OneArmedScissor
    • 13 years ago

    “Then again, Intel making an insane profit doesn’t mean AMD won’t make any.”

    *ding ding ding*

    I don’t think anyone was ever disagreeing with you that Intel won’t be outrageously profitable this year, but it’s finally showing that AMD’s real “problem” was their insane and seemingly endless restructuring.

    Whether it pays off or not is anyone’s guess, but once it’s completely done, they won’t exactly be any worse for the wear.

    • NeelyCam
    • 13 years ago

    I’m thinking next quarter might be a bit tougher with Fermi finally out, and i3/i5 increasing intel’s laptop/desktop competitiveness.

    Then again, i3/i5 are expensive because Intel is shooting for high margins, and Fermi is an utter failure. So who knows how it’s going…

    • SubSeven
    • 13 years ago

    I was listening to their call and from what they said, revenue from the GPU segment grew by 87% while the CPU segement grew by 21% (quarter over quarter). Overall, although AMDs CPU revenue is far larger than its GPU revenue, I’d venture a guess that most of this profit is from the GPU division. They had very healthy margins this quarter (considering the eleveted prices) on their GPU. Unfortunately, AMD won’t divulge this information. Several analysts kept asking for these kinds of questions during the meeting and the CFO wouldn’t provide any specifics (he was kind of a dick about it too). Next quarter will paint a better picture. I’d expect that they report another profit, assuming again that the economy doesn’t tank until then.

    • NeelyCam
    • 13 years ago

    Yes, I stand corrected. Good job, AMD!

    Next quarter might paint a different picture, though, as i3/i5 got unleashed to the unsuspecting public. Then again, Intel making an insane profit doesn’t mean AMD won’t make any.

    Here’s another topic: how much of this is due to CPU profits, and how much is due to zero competition in the GPU field?

    • NeelyCam
    • 13 years ago

    You know, Intel’s rebates to the manufactures are not that different from AMDs heavily discounted CPU prices.

    And AMD making a small profit now is not proof that Intel was artificially corrupting the marketplace. Don’t you think that most of the profit is merely a result of economy recovering..?

    • NeelyCam
    • 13 years ago

    YOU LIE!!

    • NeelyCam
    • 13 years ago

    Whoops, the DID post a profit! Go figure…

    Consolidating those loans with the “gift funds” really paid off, eh?

    • SubSeven
    • 13 years ago

    Wrong…. AMD would still be profitable on a non-gaap basis. If you listen to the earnings call, you’d know that the $325M gain is not the only entry. AMD also had a $186M loss and several other smaller entries related to depreiation and such. Excluding all of these accounting adjustments, AMD would have recorded a net income of 9 cents per share or about $67M.

    • Sahrin
    • 13 years ago

    …I don’t think you understand what the a one-time charge is. Basically what happened is, AMD’s accounting in prior quarters was inaccurately worse than it should have been – so AMD is making an accounting adjustment to correct for that; and that adjustment happens to have a positive impact. It’s perfect rationale to say that, as a result of AMD’s operations, there was a loss.

    GAAP exists to provide a common baseline for comparing financial results between companies (and a common standard for how things should be accounted for). Non-GAAP is the way a company alters their books because they believe GAAP does not accurately report their results. But when talking about AMD outside of internally – the only numbers that it makes sense to talk about are GAAP, because non-GAAP only applies to AMD.

    AMD is doing better, and I think that’s great, I’m a huge fan of the company. But according to GAAP, without the one-time they would’ve lost money on operations. That tells you that despite all the good things they’ve done, they’re still struggling – which is all I said in my original post.

    • willyolio
    • 13 years ago

    man, i remember reading comments a year after the acquisition saying AMD should just shut down the ATI division… right after buying them. somehow, not getting the best price on a product means you should trash the product immediately.

    • NarwhaleAu
    • 13 years ago

    About time they posted a profit.

    • Voldenuit
    • 13 years ago

    Reply to self. After reading up on AMD’s roadmaps, I found out that Bulldozer will be AM3!

    Llano will require a new socket to accomodate the video out, but it looks like enthusiasts will be sitting pretty with AM3 for a while yet, since they are more likely to buy a discrete GPU than use an IGP.

    Bulldozer looks like a big deal. This may be to Phenom II what Nehalem was to Core 2. Fingers crossed.

    • burntham77
    • 13 years ago

    For years I thought it was odd that you rarely saw AMD chips in retail computers (Dells, for example). Then we all found out that Intel was using underhanded practices to push their chips and my instincts were confirmed. That’s why when we bought a laptop recently, I made sure it was AMD.

    I have had AMD chips only for the last ten years and I will continue to do so. Their chips are a great value, they perform very well, their socket setup makes sense, and they have a superb platform between their boards, CPUs and video cards.

    Much love for AMD and I am looking forward to eventually moving up to a six-core AMD CPU down the road.

    • Voldenuit
    • 13 years ago

    My next build will be AM3.

    I’m sick of intel changing sockets like it’s underwear, and crippling their midrange chipsets with insufficient and outdated interconnects (not enough PCIE lanes on H/P55, running PCIE2.0 lanes at 1.0 speeds on H/P55, no USB3, no SATA3).

    The only question is whether to wait for Thuban or just get an X3/X4. Or even more outrageous, to wait for Llano.

    • SubSeven
    • 13 years ago

    +1 buddy. That’s why my money is riding the same reasoning 😉

    • khands
    • 13 years ago

    Although when you think about it, AMD’s on die IGP would’ve been even farther behind than Intels if not for buying then, and I doubt their CPUs would’ve magically been better, maybe they would’ve caught the Phenom 1 bug before launch, but that’s impossible to tell.

    • SubSeven
    • 13 years ago

    So where are some of the doom to AMD predicting clowns these days? I have yet to see a comment from AMDisDEC.

    NeelyCam, if I recall correctly, you and I had an argument a while back (and WaltC chimed in) about when AMD is going to reach profitability. I believe you said that it was very unlikely for them to be profitable this year while I said that they might be profitable in Q3 and definitely profitable in Q4. Turns out we were both wrong… Q1 is all it took. And most impressively, the Q1 profit (though a mere $67M) is real and cash based as opposed to accounting generated. This bodes quite well for their future prospects, assuming the economy keeps chugging along on its current track.

    • khands
    • 13 years ago

    If they really can increase their integer performance by 80% (as a certain AMD rep told Anandtech in a preview article), plus the benefits of moving to a 32nm node, I would very much hope they’d be better, or at least as good as, Sandy-Bridge. That being said, I think Intel will at least match if not surpass the initial Bulldozer units within a year of launch, at least at the PC top end.

    • khands
    • 13 years ago

    Because the non-GAAP numbers are closer to net 0 than the GAAP? Both still show a profit.

    • SubSeven
    • 13 years ago

    You are a fool and know very little about accounting. GAAP in this case requires AMD to include in the final income amount several charges of gain and impairment on assets related to Glofo (you should listen in on the conference call; they explain it there). These charges consisite of the 300M gain you mentioned but also a 186M loss and several other smaller amounts. You should note, that all of these gains/losses are NON-CASH; they are merely accounting entries to reflect market value changes. However, GAAP requires that these be included in the income statement. In this particular period, this GAAP requirement aided AMD by making their net income more impressive, just like in previous periods when AMD wrote down the value of its ATI acquisition, GAAP standards made their already ugly losses even worse. Again, in both cases, these adjustments to net income are NON-CASH.

    Like Yuri correctly pointed out, if you exclude all of these non-cash adjustments, AMD’s net income (and this is Non-GAAP) was 9 cents per share or about $67 million (this a cash gain). This Non-GAAP figure much more accurately reflects AMD’s performance for the quarter.

    • khands
    • 13 years ago

    Pretty much this, ATI was doing very well, which is never when you want to buy.

    • Jigar
    • 13 years ago

    See, i added to their profit 😛

    • BobbinThreadbare
    • 13 years ago

    It was a great idea, it was a terrible time. They just had to wait for the 2000 series to come out and bomb, and the price would have been half what they paid.

    • Silus
    • 13 years ago

    AMD would never have enough money for NVIDIA and as you pointed out, they already payed too much for ATI as it is.

    And you seem to be forgetting the lemon AMD got with ATI, in the form of R600.

    • Rza79
    • 13 years ago

    How do you mean, payed too much for NexGen?
    Without NexGen there would be no AMD.
    Let’s not forget that the first cpu AMD created themselves is the K7.
    (i’m not couting the K5 as a real creation since it was nothing more than an Am29k + x86 decoder)

    At the moment of purchase AMD didn’t pay too much for ATI. AMD couldn’t foresee the future and know R600 was going to be bad (or G80 be that good).

    • djgandy
    • 13 years ago

    Well I think AMD have set a new record for number of successive quarterly creative accounting charges.

    They should be a bank.

    Good job on actually posting a small profit excluding that charge though.

    • mcforce0208
    • 13 years ago

    Gooooo AMD! And go competition!!

    • ronch
    • 13 years ago

    Damn, I really, really hope AMD’s upcoming Bulldozer will surpass Sandy Bridge, and will be scalable enough to stave off future competition from Intel in terms of performance, manufacturing cost and energy efficiency.

    Go AMD!

    • ronch
    • 13 years ago

    It’s turning out to be a good investment (in ATI), but I kinda wish they paid less for it. As many know, AMD paid too much for ATI. Not their first time to do it. Way back in 1996 they paid a bit too much for NexGen too. Gotta be more careful next time, AMD. Then again, Nvidia and ATI are the only real games in town so AMD doesn’t really have a lot of choices.

    It’s a good thing they didn’t buy Nvidia instead. That time Nvidia was far more expensive and look at their Fermi delays. AMD execs would’ve banged their heads on the wall.

    • can-a-tuna
    • 13 years ago

    “Q1 2009 Q4 2009 Q4 2009” Nice copy-paste 🙂

    • yuriylsh
    • 13 years ago

    If somebody would like to stick with GAAP numbers he would not excluded GF spinoff numbers from the GAAP-based balance. By excluding some numbers from GAAP a person steps on the non-GAAP territory. Then it seems funny that when he is told that using (proposed by himself) non-GAAP numbers the balance is still positive, the person says who cares about non-GAAP numbers?

    • zagortenay
    • 13 years ago

    How can you still say that? Timing and price were possibly wrong, but AMD is stronger than ever with ATI. The added value to AMD brand with the success of HD 5800 series is more than words can explain. Nforce chipsets for AMD system anyone?

    • DrCR
    • 13 years ago

    +1 on GAAP. Did you check their financial statements though? With my limited knowledge I’d imagine it might be put as a discontinued operation.

    I’d check myself, but apathy has triumphed.

    • thecoldanddarkone
    • 13 years ago

    GAAP was created for a reason… I’ll stick with GAAP.

    • yuriylsh
    • 13 years ago

    That’s funny 🙂 Who the hell cares are those numbers GAAP or non-GAAP? One set of numbers includes GF spinoff, another does not. Both show profit not loss. So are you still convinced that without the spinoff they would be in red?

    • Sahrin
    • 13 years ago

    Who the hell cares what the non-GAAP numbers are? That’s like a Japanese person saying “if we exclude the atomic bombings, we won World War II.” Non-GAAP is BS.

    • yuriylsh
    • 13 years ago

    Here is the excerpt from the earnings call transcript(http://seekingalpha.com/article/199031-advanced-micro-devices-inc-q1-2010-earnings-call-transcript?page=2), so the words directly from AMD’s Chief Financial Officer:

    l[

    • Sahrin
    • 13 years ago

    I can’t. I’m talking about the numbers – look at the P&L and you can see that’s not the case, I don’t know where the heck they came up with that number.

    I’m not rooting against AMD, I’m just saying it sucks that they are still struggling despite the quality of their products.

    • WaltC
    • 13 years ago

    The “surprised” comments by AMD skeptics never fail to amuse me…;) Ah, if only I had a dollar for every time someone wrote “AMD is doomed!” in the last decade–if only!…;)

    I think now that the cat’s out of the bag in relation to the way Intel kept the playing field uneven since 1999 by throwing money and artificial supply constraints around instead of merely competing on technology, and since Intel in writing has sworn off its old behaviors in that regard–by golly I think AMD is without a doubt going live long and prosper.

    Lots of people to this day still don’t understand why AMD is still kicking and doing well. If it was just a case of AMD vs. Intel I could certainly share that skepticism. But AMD has had an enormous amount of fiscal, moral, and technical support from all of its partners (IBM, Asus, MSI, ad infinitum) in order that Intel be denied the monopoly on “everything” that it surely sought for so many years. These partners all chipped in and supported AMD because they wanted not to be held hostage to Intel’s every whim and desire–which used to be the case for them until AMD’s ascendancy beginning in 1999 with the K7 launch.

    I have a feeling this is just the beginning–and with AMD free to compete against Intel on price/performance instead of kickback money (which AMD could never match), I imagine that AMD’s future has never looked better than at the present time.

    Events like this are a win-win for consumers everywhere.

    • flip-mode
    • 13 years ago

    Amen

    • Saribro
    • 13 years ago

    Then how do you interpret this quote from the article?:
    “Excluding the gain from the manufacturing spinoff, AMD would have earned 9 cents per share in the most recent quarter.”

    • grantmeaname
    • 13 years ago

    YAY AMD!

    • Sahrin
    • 13 years ago

    Well first of all, they weren’t, and second of all, that’s not what I was getting at. None of the figures (either in AMD’s own 10Q or the Yahoo article) support what you are claiming.

    • EsotericLord
    • 13 years ago

    AMD’s got some sort of time wrap device. This quarter was just the test phase.

    • UberGerbil
    • 13 years ago

    Buy the rumor, sell the news.

    • yuriylsh
    • 13 years ago

    You are wrong about this:
    l[

    • Sahrin
    • 13 years ago

    I’m wrong about what? The article you linked to specifically mentions the $325M non-cash accounting change related to GF.

    • esterhasz
    • 13 years ago

    well, cashing in now or greadily waiting for more? some analysts project $12 over the next few month and magny cours may make up for lost terrain in the server market… maybe hold on a wee little bit longer…

    • sparkman
    • 13 years ago

    One of the table headings is wrong. “Q4 2009” is listed twice, and “Q1 2010” is missing.

    • BoBzeBuilder
    • 13 years ago

    It wasn’t a terrible idea. Time will tell.

    We have to wait for future products like Fusion that incorporate graphics with CPUs.

    • sschaem
    • 13 years ago

    35cents eps with the GF ccounting, 9cents without

    Analyst expected a 7cents loss.

    AMD is also expecting a ~9cents EPS profit next quarter.

    But I’m curious about magny cour production levels.
    We already know they are building chipset as fast as TSMC can make them for the next quarter…
    Better news, its TSMC that will invest ~5billion , not AMD, to increase production.

    I did my part for that 9 cents EPS 🙂 I built an AMD HTPC …

    • blastdoor
    • 13 years ago

    it was a terrible idea.

    But I’m glad AMD is finally profitable again. I’m as amazed that they survived as I was amazed that Apple survived. But in both cases I’m glad to have been wrong in predicting their demise.

    • BoBzeBuilder
    • 13 years ago

    Yes you are.

    • ClickClick5
    • 13 years ago

    Nope. First thing I noticed.

    • zaeric19
    • 13 years ago

    Am I the only one who noticed that Q4 2009 is listed twice?

    • Farting Bob
    • 13 years ago

    Yes, it was still a bad investment, at least with the timing it was. $4bn, plus years of bleeding money just as Intel and NV opened cans of whoopass on them with C2D and G80. Itll still take many many years to earn back what they lost since the ATI deal, and the GPU market tends to be swings and roundabouts. ATI ahead for a gen or 2, NV ahead for a while.
    All this while the discreet market is heading towards a point where people will be unlikely to feel the need to upgrade every year or 2. Monitors arent going to keep getting bigger, and most people wont be buying multiple screens. Sure there will always be some who buy the latest gen, but that number will likely get smaller with each generation.

    • yuriylsh
    • 13 years ago

    Seems like you are wrong:
    “l[http://finance.yahoo.com/news/AMD-scores-1Q-profit-as-PC-apf-4121061754.html?x=0&.v=6)

    So they are in black even excluding the spinoff. It’s not as impressive as 35 cents per share including the spinoff, but still in black nonetheless

    • MadManOriginal
    • 13 years ago

    Down 5% after hours. lol :/ But yeah those who bought during the $2-3 price timeframe are making off well…then again lots of companies were priced for bankrupty during that time.

    • Meadows
    • 13 years ago

    Can everyone just shut up about the ATI acquisition already?

    • Sahrin
    • 13 years ago

    Unfortunately these results include a $325M one-time related to the GF spinoff and accounting changes.

    🙁

    It seems like AMD can’t win for losing…

    What will be interesting is if AMD starts realizing big gains in the value of its GF shares as a result of its success in the foundry market. They could end up in an even better position than Intel – making a profit on IP but also taking a cut of fabless’ revenue too!

    • yuriylsh
    • 13 years ago

    I would like to see AMD to be more concentrated on CPU/GPU improvements than on how to survive financially, so this is a good news indeed.

    • dpaus
    • 13 years ago

    They’ve worked long and hard for this; they deserve a good ole fashioned staff party tomorrow afternoon.

    • Anvil
    • 13 years ago

    Ohhhhhh yyyyeeeaaahhhh…

    Excellent news.

    • khands
    • 13 years ago

    This is pretty much the news we’d all been waiting to here, I wonder how their stock is doing? If they can keep it up those that bought them around $2 will be making bank.

    • TheEmrys
    • 13 years ago

    Yah for competition!

    • willyolio
    • 13 years ago

    well, it’s about time…

    anyone still think the ATI acquisition was a bad idea?

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