AMD closes out its fiscal 2017 with another fully profitable quarter

AMD announced its fourth-quarter 2017 financial results and full-year 2017 financials this afternoon. On the way to another fully profitable quarter under GAAP, the company took in $1.48 billion in the fourth quarter of last year, up 34 percent year-over-year, and it posted operating income of $82 million, compared to a $3 million loss a year ago. The company's net income also stayed in the black with a $61 million result, compared to a net loss of $51 million a year ago. Gross margin was 35%, up three percentage points on the year.

  Q4 2017 Q4 2016 Change from Q3 2016
Revenue $1.48 billion $1.11 billion up 34%
Operating income $82 million -$3 million
Net income $61 million -$51 million
Gross margin 35% 32% up 3 percentage points

The company's Computing and Graphics business brought in $958 million in revenue, up 60% on the year. AMD attributed this performance to strong sales of Ryzen CPUs and Radeon graphics processors. The division brought in operating income of $85 million, compared to an operating loss of $21 million in the fourth quarter of 2016. Client CPU average selling prices were up from the year-ago quarter, as well, thanks to Ryzen CPUs.

The Enterprise, Embedded, and Semi-Custom business brought in $522 million, up three percent year-on-year, thanks to server-related sales. Operating income for the division was $19 million, down from $47 million a year ago, thanks to a one-time licensing payment to the company accounted for in the fourth quarter of 2016 and higher R&D costs. The company's All Other bucket leaked a $22 million operating loss, smaller than the $29 million loss recorded in the fourth quarter of 2016.

For its fiscal 2017, AMD posted $5.33 billion in revenue, up 25% year-on-year, thanks largely to the improved performance of the Computing and Graphics business. Operating income totaled $204 million for the year versus an operating loss of $372 million in AMD's fiscal 2016. Net income totaled $43 million, compared to a net loss of $497 million in the prior year. Gross margin rose 11 percentage points from 2016 to 34%, an improvement AMD attributes to the one-time $340 million it paid in 2016 as part of an amendment to its wafer supply agreement with GlobalFoundries. Net income of $43 million sealed in-the-black annual results for AMD and contrasts nicely with the company's $497 million net loss the year before. The company ended its 2017 with $1.18 billion in cash and cash equivalents, down from $1.26 billion a year ago.

For the first quarter of 2018, AMD expects $1.55 billion in revenue, plus or minus $50 million, which would be a 32% year-on-year increase. The company says that expectation comes from the triple threat of Ryzen, graphics, and Epyc products. The company isn't providing full-year guidance for its fiscal 2018 just yet.

Comments closed
    • johnsmith26
    • 2 years ago
    • Tristan
    • 2 years ago

    Department Enterprise, Embedded and Semi Custom, 19 mln $ profits, and sharp decline in revenues.
    That means that nobody is buying EPYC.

      • Puiucs
      • 2 years ago

      Buy what? Do you think that the server market operates like the PC market? something launches and the next day people build PCs?

      First off, third party server providers need to build products around the Epyc platform and this takes a very long time. We’ll know just how well Epyc will do in about a year or two.

      Second, potential buyers of large servers (like AWS or Azure) usually work with custom designs which also take a long time to be made.

      So far AMD has struck some deals with large cloud providers to expand and build using their products (Azure, AWS, Baidu, etc). But they won’t see financial gains from it so soon.

    • End User
    • 2 years ago

    At the beginning of 2017 I had no plans to buy any AMD products. By the end of 2017 I had purchased 2 AMD CPUs, 2 AMD GPUs, and a crazy 38″ FreeSync display.

    Well done AMD.

    • Unknown-Error
    • 2 years ago

    Phew! Thats a relief.

    • pogsnet1
    • 2 years ago

    Why the Revenue is so huge while the net income is just a very tiny fraction of it?

    Is it eaten by operating expenses?

    I compare this to Apple:

    Apple is providing the following guidance for its fiscal 2018 first quarter:

    revenue between $84 billion and $87 billion
    gross margin between 38 percent and 38.5 percent
    operating expenses between $7.65 billion and $7.75 billion
    other income/(expense) of $600 million
    tax rate of 25.5 percent

    So damn huge… but I don’t find their products useful, at least on me.

      • Beahmont
      • 2 years ago

      Volume, self pricing markup, brand value charge, and overall high dollar sale prices.

      Apple’s verticle integration allow it to charge various departments fairly large margins internally that inflate the price of their products for the purposes of calculating their ‘production’ cost that is then used to calculate their final price to distributors that includes Apple’s profit margin markup.

      The real cost to Apple for your $800 Smartphone is usually less than $300 dollars, but through some clever accounting they legally get to tell everyone it’s around $450-$500 dollars and then they add their profit margin markup that brings the phone up to around $800’s.

      Most US Telecoms, and to my knowledge most North American telecoms, break even or only make a few dollars profit on the phone sales with their real money coming from service fees. They want to sell you their service, to use their service you need a device that can access their service, and it’s much better off for the telecoms to help you get a phone by interest free financing the phone or large ‘discounts’ with a service commitment (the infamous 2 year contract) so they can start shaking you down for providing you cell and data services.

      The game is rigged however so that Apple, as the status symbol de jour, to charge what it wants, have the telecom pass along the cost to you the customer, and still make obscene profits on their ‘service.’

        • blastdoor
        • 2 years ago

        That’s a weird conspiracy theory. If Apple were making 60% margins, they would very happily tell us that. There’s really no reason to hide huge margins.

        Don’t let your personal disinterest in Apple products warp your brain — you risk acquiring Apple Derangement Syndrome.

          • K-L-Waster
          • 2 years ago

          [quote<]There’s really no reason to hide huge margins.[/quote<] Quite the reverse, in fact. High margins make a company attractive to investors.

          • Beahmont
          • 2 years ago

          One word.

          Taxes.

            • K-L-Waster
            • 2 years ago

            Corporations are taxed on revenue, not margin.

            • Beahmont
            • 2 years ago

            No. US corporations are taxed on Profit. No profit, no income taxes. Artificially increasing cost reduces the tax burden in the US.

            • blastdoor
            • 2 years ago

            You’re right, taxes are on profit, but gross margin does not equal profit. What ultimately matters is return on capital, and you can have a very high return on capital even with slim margins.

            And sure, if a company can get away with artificially inflating costs, there’s an incentive to do that. Perhaps there are loopholes in the new tax law that makes that possible, but I don’t think prior law was that dumb — if it was, then everyone would have done it, and there would have been no need to keep profits overseas.

            • Beahmont
            • 2 years ago

            Most major corps are not as vertically integrated as Apple so it’s harder for them to take as much advantage of this as Apple does. But yeah, pretty much every company I’ve ever seen the books of does in fact artificially inflate their costs as much as they can get away with. Hell that’s the entire point about all the jokes about billing CEO dinners as business expenses.

            And really, in a system that primarily taxes profits instead of revenue, this is the expected and desired behavior in the US model of economics. It’s also the reason why the US is one of the few countries in the world that taxes the profits of US companies not earned in the US in the first place.

            • bthylafh
            • 2 years ago

            There ain’t but two things that come from Taxes!

      • cynan
      • 2 years ago

      I chalk it up to the cost of HBM2. (Only being semi facetious)

    • brucek2
    • 2 years ago

    “Fully” profitable? Is this some new jargon innovation from AMD investor relations / PR?

    What’s their guidance for next year? Maybe “Entirely fully profitable”?

      • Redocbew
      • 2 years ago

      I would guess that’s business speak for “Not dead yet…. Getting… better…”

        • just brew it!
        • 2 years ago

        IOW… “Whoo-hoo, we didn’t totally suck this past quarter, and we have a good chance of sucking even less next quarter!”

        • Srsly_Bro
        • 2 years ago

        Bring out your dead?

          • Redocbew
          • 2 years ago

          *thwack!*

          See you next Thursday.

      • Srsly_Bro
      • 2 years ago

      I’m all out from the taunting earlier. I like your post. Very much. Gg, bro.

      • Klimax
      • 2 years ago

      I guess it is shorthand for “no matter what accounting you look we are profitable and there are no one-time charges either”

    • Chrispy_
    • 2 years ago

    So who’s benefiting from the mining craze?

    Are AMD charging AIB partners more per GPU die?
    Are AIB partners charging distributors more per card?
    Are distributors charging retailers and etailers more per card?
    Are retailers making all the profit?

    I see listings on CL/Ebay etc selling RX Vegas by the box (10 GPUs in a brown shipping crate) and listings by the pallet (40 boxes). It’s quite clear that individuals in the distribution chain are just screwing over everything further down the chain for a quick buck.

      • just brew it!
      • 2 years ago

      I would assume AMD had contracts with their board partners which stipulated a certain price.

      Probably same for the board makers selling to the distributors.

      If I had to guess, most of the extra profit is going to the distributors and/or retailers.

      • Klimax
      • 2 years ago

      Distributors and retailers.

      For example NVidia in its own store sells them for original price:
      [url<]https://www.nvidia.com/en-us/geforce/products/10series/geforce-store/[/url<]

        • freebird
        • 2 years ago

        But they are all out of stock except for the Titan XP…

          • Klimax
          • 2 years ago

          They can’t hog all chips for their own products. Vendors and retailers would complain sky high. (Including antitrust complaint)

      • derFunkenstein
      • 2 years ago

      I think it’s the last one

    • ronch
    • 2 years ago

    Glad to see their profits have been Ryzen these days.

    • not@home
    • 2 years ago

    So how much debt do they still have?

      • Goty
      • 2 years ago

      I was wondering the same thing. I’m guessing it’s still several times their cash on hand.

      • CScottG
      • 2 years ago

      ‘raises pinky-finger next to mouth’ ..one BILLION dollars!

      -actually it’s about 1.6 billion.

        • Beahmont
        • 2 years ago

        So at the current rate of more or less 61 million in profit a quarter, and if the turn their entire quarterly profit over to paying down their debt, with no further interest or principal it will take AMD about 27 quarters (6 and more or less 5/8th of a year) to pay off their debt.

        That’s still bad news for AMD. It’s not terminal news, in that they will likely get their refinance approved for the balloon debt that is coming due very soon, but it probably won’t be on very generous terms.

          • DPete27
          • 2 years ago

          Let he without debt cast the first stone…..

          It’s not bad to have debt, as long as you can make the payments. Most businesses (and people) operate with some amount of debt at any given time.

            • ludi
            • 2 years ago

            I’ll go with the fire analogy: a dangerous servant and a fearsome master. It can be used productively but keep a very close and careful eye on what and where you use it.

            • Beahmont
            • 2 years ago

            Well duh. That’s why I said it’s not terminal.

            But at their current rate of expenditures to profit, no one is going to want to be left holding the bag if this is just another flash in the pan for AMD. That means higher interest rates on loans made to AMD than if AMD were making more money on the same expenditures. Not incidentally this also raises AMD’s costs further reducing the amount of money made per dollar spent, thus perpetuating the high interest rates AMD has to pay on loans it has to take as just a normal part of business.

            Which is why I said this is still bad for AMD. They did good, much better than a lot of peoples expectations. However they are still currently trapped in a debt-loan cycle no business wants to be in, and unless AMD can increase their earnings to expenditures ratio significantly from where they are now, they don’t seem to be on a course that can get them out of their current unfavorable high interest loan cycle.

          • nanoflower
          • 2 years ago

          Looking at this chart [url<]https://finance.google.com/finance?q=NASDAQ%3AAMD&fstype=ii&ei=wEZzWsi-DcODmAG5rLnYBg[/url<] it seems that AMD is paying off their long term debt at around $25 million a quarter so it's going to be about 53 quarters before the debt is paid off.

        • ronch
        • 2 years ago

        I think it’s quite a bit more than that! I think it’s a MILLION dollars!!

          • K-L-Waster
          • 2 years ago

          Plus I hear you get a set of ginsu knives and a diamondoid ring for that.

      • LostCat
      • 2 years ago

      [url<]https://ycharts.com/companies/AMD/total_long_term_debt[/url<]

      • Puiucs
      • 2 years ago

      compared to Intel, AMD’s debt looks like spare change 😀

    • PrincipalSkinner
    • 2 years ago

    Gief me Zen refresh!

    • Neutronbeam
    • 2 years ago

    At best, it’s a miner victory.

      • Laykun
      • 2 years ago

      I found this comment quite cryptic.

        • PrincipalSkinner
        • 2 years ago

        You should be blocked and chained.

          • K-L-Waster
          • 2 years ago

          You guys are making a hash of this.

            • just brew it!
            • 2 years ago

            We finally have proof of all the work AMD has put into developing their current product portfolio.

            • Redocbew
            • 2 years ago

            Only a matter of time before a someone tries to burst their bubble, then they’ll need proof that they were in this space first.

            • NovusBogus
            • 2 years ago

            At the very least, someone is going to give them a bloody node.

            • tipoo
            • 2 years ago

            Alright, something smells, who sharded?

            • LocalCitizen
            • 2 years ago

            hey JBI,
            as i recall you used to make some coins by writing a blog named “bits and bytes”?

            • just brew it!
            • 2 years ago

            LOL… that was not a paid position. Neither is “Forum Admin”… 😉

            • LocalCitizen
            • 2 years ago

            so you got aethers for your time
            🙂

            • Wirko
            • 2 years ago

            By now, this thread looks like a chain reaction made out of thin air (“thin air” being the lack of Vega cards).

            • Mr Bill
            • 2 years ago

            AMD chained their wagon to a couple of Ryzen stars.

      • derFunkenstein
      • 2 years ago

      Spectacular

    • Kougar
    • 2 years ago

    AMD can’t keep cards on the shelves so I should certainly hope they made a profit.

      • just brew it!
      • 2 years ago

      Unfortunately, when this crypto bubble eventually pops the market will be flooded with used GPUs and they’ll be left with piles of unsold new ones.

        • Chrispy_
        • 2 years ago

        Yay, cheap Vegas for everyone! \o/

        Perhaps that will finally be an end to G-Sync.

        • jensend
        • 2 years ago

        Doubtful. Mining can be hard on the hardware, and not everyone wants to gamble on a used card that has been running full blast 24/7 for a year or more. I think there will be sufficient people looking for new cards to keep the market going.

          • just brew it!
          • 2 years ago

          It’ll still be a potential bloodbath for AMD/Nvidia and their board partners unless they anticipate it and adjust production accordingly. Even if there’s still demand for new cards from gamers, demand from miners will dry up, likely causing a big drop in sales.

          OTOH, I suppose it is possible that pent-up demand from gamers who were waiting for prices to return to sane levels might help.

            • Kougar
            • 2 years ago

            Pent up demand will be a factor for sure, but you should add all the miners that plan to gear up on the cheap in anticipation of the next bubble/coin. If I was a miner and anticipated another bubble I’d be ready and waiting for the flood of GPUs to cherry pick from, would make for a way faster ROI than buying new gear.

          • Zizy
          • 2 years ago

          Mining is hard on fans as they need to run constantly, but easy on the GPU chip, as it is at a constant temperature and lower voltages.

          But I agree that tons will be looking for new cards as they will finally be able to buy gaming cards for a sane price.

          • tipoo
          • 2 years ago

          I really want to see an analysis of modern solder risk levels from running at full bore. I imagine after the 2009-2011 lead free fiasco of a switch it’s been made steadily more reliable.

        • pogsnet1
        • 2 years ago

        I heard that long time ago… still that doesn’t happened. (almost a year already)

          • Beahmont
          • 2 years ago

          The US housing bubble that brought on the “Great Recession” was in bubble state for more than 3 years.

          Bubbles really have only one rule: The longer the bubble the bigger the crash.

    • K-L-Waster
    • 2 years ago

    Two profitable quarters in a row? O_o

    Who are you and what have you done with the real AMD??!?!?

      • Klimax
      • 2 years ago

      Don’t worry, they’ll soon be back in standard problems. Intel was far faster to react than in Netburst era. And if Intel’s adjustments wont do that, then crypto burst will. (Although it seems there are still enough of idiots to be tapped, so question is when it will happen…)

        • Anonymous Coward
        • 2 years ago

        I suspect Intel will show more decline than AMD. Intel has lost a huge amount of their advantage, and they can’t just conjure a vastly superior product this time around. Most of the market is going to come down to pricing and arm-twisting.

          • Klimax
          • 2 years ago

          On the other hand, AMD exhausted most of architectural deficit too.

        • blastdoor
        • 2 years ago

        [quote<]Intel was far faster to react than in Netburst era.[/quote<] The Netburst+Itanium strategy was a massive product strategy failure and it couldn’t be fixed over night. Today, Intel does not have a product strategy failure in the x86 space. It was AMD that had the massive product failure and that was fixed with Ryzen. Intel just responded by cutting prices. But this doesn’t mean Intel is in the clear, because Intel actually is guilty of a massive strategic failure — one that will be much harder to correct than correcting Netburst+Itanium was. The massive failure that threatens Intel today was their failure to fab SOCs for smartphones at a competitive price. The result of that failure has been the exclusion of Intel from the largest market for CPUs the world has ever known AND the flow of tens of billions of dollars in revenue to the foundries. Over the last 10 years, the foundries have made huge investments, enabling them to reach a point now where they might actually be surpassing Intel in manufacturing, using Intel’s preferred transistor density measures. I say “might” because it’s a little murky right now.... TSMC 10nm appears superior to Intel 14nm, but TSMC 7nm and Intel 10nm are coming soon and we can’t be sure how they will compare. But even if the foundries haven’t surpassed Intel, they have narrowed the gap immensely. The point at which this failure might really start hitting Intel’s bottom line is late 2019, when AMD is using GF 7nm and Intel is using their own 10nm. At that point, Intel will be forced to compete against AMD solely on the basis of design, not on the basis of fab process. Intel will probably still have the better design, but this will be a much closer competition than at any time since 2005. Intel certainly isn’t going out of business — they are not “doomed”. But they might never recover from the strategic blunder of not competing in the smartphone SOC business, meaning they may never regain their fab process advantage, and their 60% margins might be gone forever.

          • Anonymous Coward
          • 2 years ago

          It might not be so easy to declare who has “better design” in the near future. Intel wins by some metrics, but if AMD plays a wise game, I think there will be other metrics where AMD wins.

          I’m interested in Intel’s decision to get into GPUs again. I suspect it has a lot to do with the realization that they’ll need to use both hands to compete.

            • blastdoor
            • 2 years ago

            Very true. Intel’s core is designed to appeal to the broadest possible market, everything from tablets to servers. If AMD can identify a “niche” of about 20% of the market, and develop a design that serves that market better than Intel, then that would be a victory for AMD.

            • Anonymous Coward
            • 2 years ago

            Differentiation was part of the plan behind Dozer, no? Not better at everything, but better at [i<]some things[/i<]. Maybe on the second attempt. It will be interesting to see what sort of refinements AMD manages in future versions of Zen. I am not hoping for big boosts in resources, I want to see refinements and efficiency, along with a little more clock headroom.

            • blastdoor
            • 2 years ago

            My recollection is that Dozer was bad at some things, really bad at others…

            • Anonymous Coward
            • 2 years ago

            True, but that wasn’t the plan. 🙂

            • cynan
            • 2 years ago

            [quote<]It might not be so easy to declare who has "better design" in the near future. Intel wins by some metrics, but if AMD plays a wise game, I think there will be other metrics where AMD wins.[/quote<] Like not having to deal with meltdown for starters. The competition with be further constrained when Intel has to deal with minor associated performance penalties in their upcoming refreshes.

            • Klimax
            • 2 years ago

            Hard to say, because there are engineers who think/assert that fixes for Meltdown should be nearly free. (Apparently biggest cost would be to validation as it i on critical path)

    • chuckula
    • 2 years ago

    Suck it Intel!

    You Lose $700 million?

    We make $61 million!

    This is just the beginning as Intel melts down into a puddle of slag at AMD’s feet. I mean, just wait until people start buying Vega cards after AMD wins its lawsuit to stop Nvidia from illegally preventing Newegg and Amazon from listing Vega cards at retail prices (which of course is the only logical reason for why Vega 64 is $1200 on Newegg).

      • jihadjoe
      • 2 years ago

      When you don’t have any cash, you’re a lot less likely to run into [url=http://money.cnn.com/2018/01/02/investing/us-tax-companies-overseas-cash/index.html<]the gubmint's overseas cash tax[/url<].

      • dodozoid
      • 2 years ago

      Do you absolutely need to? I mean on each and every AMD related articles?

        • derFunkenstein
        • 2 years ago

        It’s in his contact.

        • tay
        • 2 years ago

        I miss the witty chuck that would get crazy high upvotes. It’s terrible now.

        • Leader952
        • 2 years ago

        He’s a Troll it’s what Trolls do.

      • Khali
      • 2 years ago

      So what happened, all the AMD shills get banned and we’re left with poor Chuckula filling in?

        • chuckula
        • 2 years ago

        I am a voice for the voiceless!

          • Leader952
          • 2 years ago

          Or a load-mouth Jack-Ass. With you they seem to be one and the same.

            • chuckula
            • 2 years ago

            Considering I basically lampooned the ideas that — given your posting history — you literally believe totally and without one ounce of intellectual curiosity, I can sort of tell that you are butthurt by me pointing out what you really believe.

            • Khali
            • 2 years ago

            Actually I find it hilarious. Ever since Chuckula has been trolling with the AMD Fan Boys party line they have all been virtually silent.

            I honestly don’t get the whole Fan Boy thing for any Corporation. I go buy which ever product that gives me the most bang for the buck no mater who made it. Next time I need a similar product it might be one of their competitors with the better product.

      • albundy
      • 2 years ago

      yeah, posts on corporate finances and revenue on a site that’s supposed to review tech stuff is the highlight of my life too.

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