AMD posts Q2 loss, still forecasts profitable second half

Yesterday, Intel posted its second-quarter financial results. Today, it’s AMD’s turn.

AMD’s revenue grew compared to the previous quarter, and the company suffered smaller losses, as well. According to Reuters, the company also beat Wall Street’s revenue forecast. Ultimately, though, the chipmaker still lost money in Q2 2013—and the quarter’s numbers paled in comparison to those from a year before.

  Q2 2012 Q1 2013 Q2 2013
Revenue $1.41 billion $1.09 billion $1.16 billion
Net income $37 million -$146 million -$74 million
Gross margin 45% 41% 40%

AMD says revenue for its Computing Solutions business was up 12% sequentially and down 20% compared to last year. The Graphics and Visual Solutions business, meanwhile, saw revenue shrink 5% sequentially and 13% year-over-year.

Oh, yes, AMD’s Graphics Solutions business has been rechristened “Graphics and Visual Solutions.” The change is meant to reflect, in part, the “growing importance of gaming and semi-custom offerings.” Nothing about the business’ operations or financial reporting seems to have changed, though—just the name.

AMD CEO Rory Read doesn’t sound displeased with these numbers. He says, “Our focus on restructuring and transforming AMD resulted in improved financial results.” Also, he expects AMD to see “significant revenue growth and a return to profitability in the third quarter.” That’s hardly a new promise, of course; AMD has been singing that refrain since January. Still, it’s good to know the plan hasn’t changed. AMD’s press release says Q3 revenue is expected to grow 19-25% sequentially.

Comments closed
    • Voldenuit
    • 6 years ago

    “Profitability one quarter away”? Is that like “space elevator 50 years away”?

    • ronch
    • 6 years ago

    I’d love to see their A=L+E at this point.

      • Srsly_Bro
      • 6 years ago

      0=0+0

      I think you mean A = L + SE for Stockholder’s Equity.

    • Tristan
    • 6 years ago

    AMD is making CPU, not profits

    • Silus
    • 6 years ago

    Nothing surprising. These results no doubt include the payments for the chips in the new consoles of the initial release batch. And they show that AMD can’t live on them alone, especially when they’ll have to be making these chips for almost a decade from now.
    Still, these are better than before. Firing people, selling assets like their HQ, etc is reducing their expenses and is at least keeping them afloat. But they still have a huge debt and are still in the red. Not really sure how investors keep putting money in this money pit that is AMD…

      • Kurotetsu
      • 6 years ago

      [quote=”Silus”<]Not really sure how investors keep putting money in this money pit that is AMD...[/quote<] Probably because they can't sell off the damn thing.

        • WaltC
        • 6 years ago

        You’re “not sure” because you are looking at the $74M they lost for the quarter, instead of the $1.16B in business the company did in the quarter (which is what investors are looking at.) You are also not looking at the fact that in the gpu/igp market segments of competition between AMD and Intel, AMD tech is the one to beat. Almost forgot to mention that AMD tech is so compelling it swept the next-gen consoles. Really, doesn’t seem that difficult to understand at all.

          • Silus
          • 6 years ago

          Since it wasn’t Kurotetsu that said he was not sure, but me, I’m guessing you meant that reply to me. And to answer your question quickly, it is very difficult to understand. Any business investment (or at least most of them) is a risk, but when that risk results in losses for years, it’s no longer an investment…it’s debt. To be an investment you have to gain something from it. But anyway, I’m not going to discuss economics and finances 101 with someone that doesn’t seem to understand it.
          Plus, it seems you don’t understand that being in the red, means that their expenses are still higher than what they make in return i.e. their expenses > revenue…but somehow you think investors are looking at revenue without caring about whether they actually made any money or not.

          It’s no wonder AMD is in the state it’s in. With “geniuses” like yourself in economics and finances in the board, being “profitable” actually means “losing money”…

          • sschaem
          • 6 years ago

          I think the stock is diving by 15% because AMD console deal terms have been revealed.
          AMD is making very little, and it confirm nvidia not wanted to do it.

          AMD will recognize revenue, but most of that money will go to manufacturing partners.

          The xboxOne will need to be a blockbuster success to impact AMD cashflow.

          To give you an idea, TSM will make more then AMD on each console sold.

          Other issue, AMD graphic business is now a money losing division…

            • NeelyCam
            • 6 years ago

            [quote<]AMD is making very little, and it confirm nvidia not wanted to do it.[/quote<] This is sort of what we expected, right?

            • sschaem
            • 6 years ago

            To me, Its worse then expected. And it seem others think the same, as the stock is plummeting… even so AMD CEO and CFO made it clear AMD will be profitable next quarter.

            edit: the issue is that AMD pretty much confirmed that their new business model will deliver a ~20% margin. This put immense pressure on AMD as they will have to grow sales by over 2x. So even if AMD grow revenue to 2 billion in revenue, they will be hemorrhaging cash even faster then today!

            Also today 1.1 billion revenue include the Ps4 and xbox one ramp up prodution orders… not good.

            • NeelyCam
            • 6 years ago

            Yeah, I just read the transcript. It was almost painful to see how they were sort of dodging questions, not giving detailed info to the analysts, and going with answers like “we aim to be competitive”. I’m wondering if that lack of info got investors spooked, worrying that AMD is hiding something.

            I don’t see, though, how AMD will be hemorrhaging cash. I think they’ve been cutting cost so heavily that – even with low gross or operating margins – they’ll be profitable by the end of the year. I didn’t see any solid growth stories in the transcript, though.. the new console profits were offset by disappearing console royalties (? is that from the current-gen consoles?).

            They didn’t really have a good answer to the question about Bay Trail either.. I don’t know – overall, Intel’s transcript seemed way more transparent

      • WaltC
      • 6 years ago

      So, okay, Brainiac…;) If console chip payments explain this quarter, what explains Q2 2012?

      No idea? I thought so.

        • Silus
        • 6 years ago

        Console chip payments don’t explain this quarter. But because they certainly already happened in this quarter, it shows that AMD can’t live off console revenue (which was obvious from day one…they already had two of the three console deals of the current generation and they bled money for years…if anything, they stay even, which is better than nothing). They actually need their core business, CPU and GPU, to be profitable…which it isn’t at this point and is actually declining. Plus console revenue for the initial batch will be different than the rest…because from that point on, AMD will only get fees from the IP they license to console makers.

        As for Q2 2012, I would have to read again the conditions and circumstances for that particular quarter. Unlike yourself, I don’t just put some words together and hope it makes sense. I actually write based on what is known as facts and since I don’t remember what happened in Q2 2012, I can’t comment on it.

    • ronch
    • 6 years ago

    So… is money from the console wins coming in already? I’m kinda tired of their promises. Then again, I’m not complaining about getting their top end FX for just $190, not too shabby considering you get more cores than you’ll ever need. AMD being profitable means we pay more.

      • sschaem
      • 6 years ago

      Yes money is coming in from the initial orders. Thats why the revenue didn’t plummet.

      But its a very, very low margin deal. All the revenue goes to buying the chip from third party.

      BTW, where can you buy an FX-8350 for $190 ?

        • NeelyCam
        • 6 years ago

        [quote<]All the revenue goes to buying the chip from third party.[/quote<] What chip are you referring to? EDIT: Reading your other comment, I think I know what you mean by third party (TSMC).

          • sschaem
          • 6 years ago

          The Ps4 and Xbox APU.

        • ronch
        • 6 years ago

        Don’t e-tailers like Tigerdirect, Newegg and Microcenter sell the FX-8350 for ~$190? Don’t know if that is the net price or not.

      • HisDivineOrder
      • 6 years ago

      Their top end FX comes in at $900. I’m not saying it’s worth it, I’m just saying that’s what it costs.

    • jdaven
    • 6 years ago

    Microsoft and Google just reported earnings as well. Not much change but Wall Street knocked them both down a peg or two in after hours trading.

    • indeego
    • 6 years ago

    [code<]AMD posts loss site:techreport.com[/code<] [i<]About 79,700 results[/i<] This doesn't surprise me.

      • MadManOriginal
      • 6 years ago

      Wow, um…yeah. Although once you get into just the second page of the results it really turns into any article that mentions the words, so you get all sorts of articles that aren’t actually about AMD posting a loss.

        • Alexko
        • 6 years ago

        Then again, 79,700 quarters of losses would mean that AMD had been bleeding money since 17,912 B.C.

        On a more serious note, AMD’s results were significantly better than the analyst consensus, as is guidance for Q3. The company should be back in the black in Q3 and, with any luck, might actually stay there this time.

          • ronch
          • 6 years ago

          Perhaps.. if Steamroller comes out this year to save their Q3. Then again, I don’t expect SR to outperform Haswell, so AMD’s pricing will still depend on how much Intel will price their stuff. Heck, if Intel prices their 4770K at $1,000 I’m sure AMD will be profitable.

          • Silus
          • 6 years ago

          Isn’t that what you and all the other die hard AMD fans have been saying for 7 years ?

          Also, luck has no factor in this. Only good management and good products and that’s been lacking in AMD for those 7 years (with the exception of GPUs)…

            • Alexko
            • 6 years ago

            Their computing business grew this quarter, mainly thanks to Kabini/Temash and SeaMicro’s dense servers, so apparently the market disagrees with your assessment that AMD lacks good products outside of graphics.

            • Silus
            • 6 years ago

            No, the market doesn’t disagrees with me. AMD is a budget oriented company, especially in terms of CPUs. The graphics unit is the only one that can keep their prices relatively high, because they keep a sort of parity with NVIDIA, even though they barely make any money…plus NVIDIA has a stronger brand.
            Whatever business they have in CPUs is because they keep their prices very low and their margins decrease, if they even exist, which explains their results. It’s not because their CPUs are good…it’s just that they are good enough for the low price they are sold for.

            • NeelyCam
            • 6 years ago

            AMD should start making GPUs on Intel’s process.

    • jjj
    • 6 years ago

    The growth in Q3 is mostly consoles but they seem to have mid-teens margins on those chips while royalties from old ones will drop so not going to help all that much, besides inflating revenue, unless the new consoles sell very well.

    • ssidbroadcast
    • 6 years ago

    [quote<]The change is meant to reflect, in part, the "growing importance of gaming and semi-custom offerings." [/quote<] Or, to put it another way, "making custom CPU/GPUs for next gen consoles is saving our a__."

      • dragontamer5788
      • 6 years ago

      Assets.

      Right? Right?

        • ronch
        • 6 years ago

        Asset Light?

    • khands
    • 6 years ago

    It’s difficult to make a profit when all your competitors released new products and yours aren’t due out for a few more months. I’m sure they’ll make a pretty penny through the PS4 and Xbone launches though, hopefully it isn’t squandered.

      • HisDivineOrder
      • 6 years ago

      I’m not so sure about “a pretty penny” since I suspect AMD saw the console deals as the ONLY way for them to even keep remotely afloat, so MS and Sony were in a great place to negotiate contracts that AMD might not find so “pretty” as “required.” When you go fridge shopping because your fridge is a little out of date and you think, “I might be up for a bigger fridge,” then you can wait for a great deal. You can sit on it.

      But if your fridge just blew up and all your food is spoiling, your ice cream is melting, and your whole family is complaining about not having anything frozen to microwave in the house or ice to let melt in your tea, then suddenly you ain’t looking for a deal. You’re just going to buy.

      MS and Sony went to Intel and nVidia, offered them a price they wanted. They both declined. They went to AMD and offered the same bottom dollar price. AMD lapped it up. They need it. Most of all, they NEEEED that free press. Look how AMD is spinning it now. “We’re doing the consoles, so clearly we’re best for PC gaming!” Toss in some clever emphasis on Gaming Evolved and they make this look real even if it ISN’T actually going to pan out that way.

      So yeah. I doubt AMD makes a “pretty penny” off the new consoles’ chips. And that money’s going to be the FIRST thing that those companies look to cut when/if sales forecasts stall on the next gen. At this point, AMD’s so poor I doubt they could challenge either MS or even Sony in court over it, either.

      If you doubt that could happen, remember that MS did it to nVidia with the original Xbox. nVidia had to win in court to get MS to pay the agreed-upon fee. Consequently, MS went ATI for the 360. Somehow, I doubt when AMD’s entire future rests on those console contracts that they’re going to do anything to jeopardize them, even if it means eating a reduced payment when/if said consoles land like the Wii U this past holiday season.

    • Meadows
    • 6 years ago

    First, let’s be clear about this: -$74 [b<]billion[/b<]?! Outstanding, Cyril, don't you agree?

      • Cyril
      • 6 years ago

      I’m afraid I don’t know what you’re talking about. 😉

        • Meadows
        • 6 years ago

        Ninja edits. How Krogothic of you.

          • MadManOriginal
          • 6 years ago

          This article – KROGERED!

            • derFunkenstein
            • 6 years ago

            [url=https://www.youtube.com/watch?v=2jRhbiRqI-c<]Let's go Krogering[/url<]

            • l33t-g4m3r
            • 6 years ago

            I’m not impressed.

      • ronch
      • 6 years ago

      Well, at least they did hit 8 digits… too bad there’s a negative sign before it.

      Edit – Oops, I wrote 11 digits. No, that would sink AMD faster than a brick of lead in oil.

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