Strong revenue doesn't stem red ink in AMD's fiscal third quarter

AMD posted a remarkable increase in revenue for its fiscal third quarter of 2016. The company took in $1.3 billion, up 23% year-on-year, thanks to "record" sales in its semi-custom SoC business and improved sales figures in its GPU and mobile APU businesses.

However, that cash inflow wasn't enough to offset losses from the $340 million one-time charge the company recorded earlier this year as part of a revision to its wafer supply agreement with GlobalFoundries. Thanks in part to that charge, the company recorded a $293 million operating loss. Also thanks to that charge, AMD says its gross margin fell to 5%, down from 23% a year ago.

  Q3 2016 Q3 2015 Change from Q3 2015
Revenue $1.3 billion $1.06 billion up 23%
Operating income -$293 million -$158 million --
Net income -$406 million -$197 million --

AMD's Computing and Graphics business brought in $472 million, an 11% increase from Q3 2015. The company says that increase is mostly thanks to increased GPU sales, but that performance wasn't enough to offset a decline in client desktop processor and chipset sales. The segment recorded a $66 million operating loss, an improvement compared to the $181 million operating loss recorded this time last year.

The Enterprise, Embedded, and Semi-Custom business took in $835 million, a 31% year-over-year increase that was driven by increased sales of semi-custom SoCs. The division turned a $136 million operating profit. AMD's "All Other" category recorded a $363 million operating loss, mostly accounted for by the $340 million one-time charge.

For its fiscal fourth quarter, AMD expects an 18% decrease in revenue from this quarter, plus or minus three percent. Even so, the company projects that the "midpoint of guidance" would result in a 12% year-on-year increase in revenue for the fourth quarter of 2016.

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