AMD promises return to profitability in latter half of 2013

After posting its none-too-encouraging financial results yesterday, AMD held a conference call to shed some additional light on the results and to take questions from investors and analysts. In the call, AMD CEO Rory Read offered some interesting details about what's been happening behind the scenes and what the chipmaker's prospects look like for 2013.

According to Read, AMD is undergoing a three-phase turnaround with the aim of of returning to profitability in the second half of 2013. The turnaround, which is expected to take "several quarters," involves a "complete restructuring" of the company's business, the delivery of a "new set of powerful products" in 2013, and the transformation of the company to "take advantage of high-growth opportunities in adjacent markets where [its intellectual property] provides a competitive advantage."

Among those "adjacent markets" are servers, semi-custom silicon, the embedded space, and ultra-low-power client offerings. (Yes, that includes hardware inside consoles like Nintendo's new Wii U.) AMD has already scored "strong design wins" for embedded and semi-custom APUs, Read said, and products based on them are due out later this year. Overall, the company plans to derive 20% of its revenue from these adjacent markets by the fourth quarter of 2013, and it hopes the figure will eventually increase to 40-50%.

Read also addressed the concerns of some industry watchers that AMD is cutting R&D spending too deep. He noted that AMD is taking "expense management" steps throughout its entire business, and the R&D cuts involve changes to improve both efficiency and productivity. For example, the company is attempting to use fewer different process technologies and to re-use more of its intellectual property. Such steps ought to help improve yields and shorten product development cycles. Read mentioned that AMD is attempting to focus more on high-volume design wins, as well, because they're more profitable.

Going back to last quarter, Read noted that revenue met AMD's internal expectations, and the company successfully managed cost and kept its cash balance "above . . . minimum acceptable levels." Read went on to tout strong mobile sales—nearly a third of notebooks sold in the U.S. last quarter were purportedly "powered by AMD"—as well as "significant revenue growth" in SeaMicro servers and "record" revenue in workstation and gaming graphics. The Never Settle promotion apparently helped grow sales of high-end GPUs—and AMD has another, similar promotion planned for this quarter.

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