AMD posts $180 million loss, shutters SeaMicro business

AMD has posted its first-quarter financial results for 2015, and they're full of red ink. The company is also dispensing with the high-density server business it acquired from SeaMicro back in 2012, effective immediately.

Here are the numbers from AMD's statement:

  Q1 2015 Q4 2014 Q1 2014
Revenue $1.03 billion $1.24 billion $1.4 billion
Operating income -$137 million -$330 million $49 million
Net income -$180 million -$364 million $49 million
Gross margin 32% 29% 35%

Compared to a year ago, revenue dropped about 26% to $1.03 billion. The modest operating and net incomes of Q1 2014 have been replaced by a $137 million operating loss and a $180 million net loss. Gross margin also fell three percentage points.

AMD's Computing and Graphics division reported a 38% revenue decrease from this time last year. The division also posted a $75 million operating loss for the quarter, compared to the $3 million income earned in Q1 2014. AMD cited lower desktop and notebook processor sales as the primary reason for the declines. The Enterprise, Embedded, and Semi-Custom division saw a 7% decline year-over-year, which AMD blamed on a drop in server processor sales.

The most interesting change in AMD's business may be the shuttering of the dense server systems unit it acquired by purchasing SeaMicro. AMD bought SeaMicro for its interconnect fabric technology. Based on statements made during its earnings conference call, that fabric technology will remain part of the firm's IP portfolio, but AMD is otherwise taking a $75 million special charge related to the shutdown.

Here are AMD CEO Lisa Su's thoughts on the quarter:

“Building great products, driving deeper customer relationships and simplifying our business remain the right long-term steps to strengthen AMD and improve our financial performance,” said Dr. Lisa Su, AMD president and CEO. "Under the backdrop of a challenging PC environment, we are focused on improving our near-term financial results and delivering a stronger second half of the year based on completing our work to rebalance channel inventories and shipping strong new products.”

For the next quarter, AMD expects a 3% sequential decrease in revenue with a ±3% margin for error.

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