AMD mixes Navi and Zen 2 details into Q1 financials

AMD had something of a disappointing first quarter of 2019 according to the company's first quarter financial report. Revenue, operating income, and net income were all down while operating expenses were on the rise. Gross margin was actually up bit. Let's see how it looks in table form.

Q1 2019 Q1 2018 Y/Y Change
Revenue $1.27 billion $1.65 Billion -23%
Gross Margin % 41% 36% +5 pp
Operating Expense $543 million $477 million +$66 million
Operating Income $38 million $120 million -$82 million
Net Income $16 million $81 million -$65 million
Earnings Per Share $0.01 $0.08 -$0.07

Source: AMD

CEO Lisa Su said in the company's conference call that demand for Ryzen 7 and 5 desktop CPUs is strong. Dr. Su also says that Ryzen mobile sales are on track to increase by 50% in this calendar year. Graphics sales weren't as rosy, though. Channel sales for the quarter were down from the year-ago quarter, when crytpocurrency mining was still a big boom industry. However, she also says that Radeon Vega GPU sales were up "a strong double-digit percentage" both year-over-year and sequentially due to increased adoption across OEM, gaming, and data center customers. 

The company expects the second quarter will turn things around a bit. CFO Devinder Kumar says to expect revenues in the $1.52 billion range. While that would represent a substantial sequential uptick, that figure still represents a 13% year-over-year decline. The company expects the graphics sales decline to continue into the next quarter due to lower graphics channel sales, lower semi-custom revenue, and "negligible blockchain-related GPU revenue."

The conference call also provided a look into the near-future for AMD. Su says that the second quarter represents a "transition" for the company's portfolio. AMD's CEO confirmed earlier rumors that the chip maker expects to start shipping 7-nanometer products in the third quarter. Su specifically mentioned Rome-based EPYC processors and Navi graphics processors. AMD has already confirmed that Dr. Su will deliver a keynote presentation at Computex, so we'll likely find out more about the company's 7-nanometer plans then. 

Ben Funk

Sega nerd and guitar lover

Comments closed
    • WaltC
    • 4 months ago

    Q1 for most hardware companies is traditionally weak–unless you have new and compelling products shipping–which AMD had for most of the year last year. Demand is somewhat soft now as the markets are waiting on solid info & ship dates for Zen 2 and Navi. I think Navi might be a big surprise–and that Zen 2 will meet if not exceed expectations.

    • ronch
    • 4 months ago

    Just kinda worrisome that it’s just $16M. Yes that’s a lot but peanuts for a global tech company with strong products.

    • cynan
    • 4 months ago

    An absolute, complete disappointment. If the main indicator you pay attention to is year-over-year change in revenue.

    Surprised that nobody has mentioned the obvious. AMD’s 2018 Q1 profits were propped up by crypto mining demand. This year, not. It’s that simple. If it wasn’t for the crypto boom (which made Vega lucrative while it lasted), AMD hasn’t had a competitive (on a profit as well as performance basis ) mainstream product since Polaris – which is way long in the tooth by now. Navi 10 will finally replace Polaris, but we’ll have an even longer wait for something that might compete with Nvidia’s flagship cards.

    So last year it was flash-in-the-pan GPU boom. This year it’s a more slow and steady CPU sales. I would argue that the latter bodes better for sustainable profitability. If AMD can ever substantially gain market share (relatively and absolutely) on both fronts at once, then watch out for those earnings. But that’s a ridiculously enormous “if”.

      • Anonymous Coward
      • 4 months ago

      AMD basically acknowledged the crypto thing, I see they mentioned blockchain revenue being negligible. Yeah, certainly it seems like crypto mining was saving AMD’s butt for a while there.

      I can happily report that the cloud platform we use at my work added Epyc some months ago, and apparently has been expanding their offering (although I never see the boxes in the low-price bidding market). So I guess they do intend to keep progressing with their AMD effort. The cloud makes it pretty easy for “renters” to jump between server hardware, so if AMD delivers the goods in the next year or two while Intel struggles, its going to be positive for them.

      • the
      • 4 months ago

      The thing is that AMD doesn’t want to compete on the high end if it would require insane die sizes. nVidia has been pushing the physical limits on how big a single die can be for a chip. That requires a lot of development time and yields of fully functional parts are just going to be awful not matter how mature the manufacturing process (yields aren’t so bad with a could of disabled units though).

      AMD would need to expand their chiplet strategy to GPUs to combat the raw amount of silicon nVidia has been leveraging. This does bring up another issue with AMD: the GCN based designs have an apparent 4096 ALU limitation. If Navi’s design breaks this barrier, they’ll be in much better shape to challenge nVidia’s high end.

    • Anonymous Coward
    • 4 months ago

    I don’t understand how they aren’t doing better. Yes the GPU side is dragging, but CPUs are solid while Intel is almost standing still [i<]and[/i<] capacity constrained. Related: the Epyc servers that AWS got never seem to show up in the spot market, so I wonder, are they doing an extended test without investing too heavily, or are they super popular with customers, or what?

      • K-L-Waster
      • 4 months ago

      – Desktop CPUs don’t sell in the volumes they used to (enthusiasts love RyZen chips, but tbh we’re not that big a market…)
      – RyZen hasn’t penetrated the laptop market very deeply yet
      – Data centers are still predominantly Intel (Epyc is making gains, true, but it’s still a long way from parity with Intel)
      – They’ve been selling gen 1 and 2 at a discount for months, which reduces revenue per chip

      Edit to add: and of course the GPU side has been a crater since the mining crash.

        • Krogoth
        • 4 months ago

        [quote<]GPU side has been a crater since the mining crash.[/quote<] It goes farther then that. It has been a dumpster fire ever since Maxwell came out. Nvidia has been enjoying insane margins and heavy volume since then.

          • Anonymous Coward
          • 4 months ago

          If nVidia can enjoy insane margins, what stops AMD from paying the bills? Its not as if AMD doesn’t cover the meat of the market. Efficiency is poor, maybe that chases away the OEMs, less watts means less supporting hardware. Or maybe its once again name recognition, in which AMD is always 2nd place.

            • Krogoth
            • 4 months ago

            OEMs only care about bottom line costs. Intel has been reigning supreme since the mid-2000s. ATI used to be huge in the OEM world but Intel’s efforts with its ubiquitous integrated GPUs on its platforms ate away at ATI.

            • anotherengineer
            • 4 months ago

            Ya brand recognition, fan boys, oems, etc.

            My buddie’s son got a gtx 1060, and paid $50 more for it than an rx570. I asked him why he went with Nvidia.

            his reply, game ready, gameworks, cause my buddies say its better.

            I asked him what game ready was – his reply mean more or better drivers
            I asked him what game works was – his reply more studios or something like that

            his age 20, and those are the people buying the cards in demand
            lol
            so I guess one is cool and the other is not cool

            • Johnny Rotten
            • 4 months ago

            This is where mindshare comes into play and why AMD’s inability to compete at the high end over the last 5 years has hurt them. Mindshare from the high end absolutely trickles down.

      • blastdoor
      • 4 months ago

      OEMs are kind of like glaciers — they move slowly, until they reach a cliff, then they move really fast. I’ll dare to guess that by this time next year, AMD will have started to make meaningful progress with OEMs.

    • Gadoran
    • 4 months ago

    So…. Ryzen 2 Q4?? Or… 2020 with larger die Navi?

    • K-L-Waster
    • 4 months ago

    “demand for Ryzen 7 and 5 desktop CPUs is strong”

    — aaaas long as we maintain fire-sale prices….

      • blastdoor
      • 4 months ago

      More like, as long as intel remains capacity constrained.

      —edit
      Which, to be clear, will be a while.
      Intel wasn’t expecting to have to sell 8 core processors to the unwashed masses on 14nm.

      Nor were they expecting to be competing with 64 core server chips on 14nm. Intel is built to sell quad cores to consumers and 16 cores to servers. This is not a problem they can fix overnight.

      Btw, how long until intel cancels its GPU? Place your bets

        • derFunkenstein
        • 4 months ago

        In the conference call, Su said she didn’t think they were seeing much of a bump from Intel’s capacity problems.

        From page 6 of the Seeking Alpha transcript:

        [quote<]Sure. So, as it relates to CPU shortages in the market. Look, we see a little bit of that, I would say, there are pockets per footage, mostly at the low-end of the market, frankly. So, from our standpoint, I don't believe it's a huge contributor to our business.[/quote<]

          • blastdoor
          • 4 months ago

          Yet.

          Look at comments coming from Apple and HP about how they are constrained by Intel.

          AMD has not had much success in OEM systems yet with Ryzen, but how much of that is because historically (1) Intel has been a reliable supplier and (2) GloFo has not ?

          Now, OEMs are experiencing Intel as an unreliable supplier and AMD is switching to TSMC, which OEMs know is a reliable supplier.

          Change comes slowly at first, then very fast, and it’s hard to predict exactly when the switch from slow to fast will happen.

          One possible tipping point could be the new Mac Pro coming later this year. If Rome is in that Mac Pro, watch out. Not because Mac Pro sales matter in and of themselves, but because of what that choice by Apple would represent — it would be a huge endorsement.

        • K-L-Waster
        • 4 months ago

        From the article:

        [quote<]Revenue, operating income, and net income were all down[/quote<] Ya really think reduced CPU prices had nothing to do with those?

          • freebird
          • 4 months ago

          Actually, Operating Income was up over the previous quarter. That also happens when you are building inventory for new launches…

            • K-L-Waster
            • 4 months ago

            Uh, I think you misread that: it was [b<]down[/b<], not up. Q1 2018 Operating Income was $120M, Q1 2019, was $38M. Edit to add: now, if you meant Operating [u<]expenses[/u<], then fair point. And yes, prepping for major launches could explain that increase.

            • freebird
            • 4 months ago

            Uh, I think you misread my post. I said Operating Income was [b<] up over the PREVIOUS quarter. [/b<] Q1 2019 Operating Income $38M Q4 2018 Operating Income $28M. Didn't you listen to the conference call or read the earnings report? It's all there in black & white: [url<]http://ir.amd.com/news-releases/news-release-details/amd-reports-first-quarter-2019-financial-results[/url<]

            • K-L-Waster
            • 4 months ago

            EDIT: NVM, derp.

      • freebird
      • 4 months ago

      So you don’t believe in clearing stock before new product launches…

        • K-L-Waster
        • 4 months ago

        You don’t believe that doing so reduces revenue and margins on those parts you sell at clearance prices?

          • Srsly_Bro
          • 4 months ago

          Hard to say without in a general sense without the numbers. Finances don’t operate on good vibes, bro.

          • freebird
          • 4 months ago

          So then you are saying their gross margins went down??? WHERE? Gross Margin was 41% Q1 2019. Up 5 points YoY and up 3 points from previous Quarter.

          • freebird
          • 4 months ago

          Tell me this: What is the margin on any unsold inventory that collects dust? and will the value of those parts be worth more or less after Ryzen 3000 launches? What is the cost of stuff sitting in the warehouse versus tangible revenue that can be use to run the business?

          If they have inventory to move, then better to move it now rather than gather dust in a warehouse… if everyone buys Ryzen 3000s or the have lots of those being manufactured. AMD had to take big write-downs on inventory Llano back in the day of Rory Read…
          [url<]https://www.tomshardware.com/news/amd-llano-lawsuit-30m-settlement,35341.html[/url<] "AMD's Llano APU was originally slated to ship in 2009, but after multiple delays due to production yields, the processor didn't come to market until 2011. During that time, plaintiffs alleged that the company intentionally misled investors, claiming there was "strong and pent up demand" for Llano. Poor sales eventually led to a massive oversupply of Llano APUs, prompting the chipmaker to take a $100 million write-down on chip inventory in October 2012. This sent AMD's stock down by as much as 75%, leaving investors holding the bag." Besides, those "fire sales" you are talking about are only with enthusiasts. Now if they were dumping millions to Lenovo & Dell for cents on the $, I'd be concerned. I have no concern with Gross Margins at 41% which is higher than any Quarter last year. What happened to the prices on all those FX 83xx CPUs after Ryzen launched??? Yeah, AMD is STILL trying to get rid of them... [url<]https://www.amazon.com/AMD-FX-8370-Processor-4300Mhz-FD8370FRHKBOX/dp/B00MUTWELC[/url<] The old saying a bird in hand is worth two in the bush...

            • K-L-Waster
            • 4 months ago

            At no point did I suggest that selling old inventory at reduced prices was the wrong decision.

            The only point is, it explains why the numbers are down from Q1 2018.

            Other comments on this article have been asking “I don’t understand how they aren’t doing better”. Selling at reduced prices is why.

            That doesn’t mean it wouldn’t be even worse if they had maintained the original MSRP.

            • freebird
            • 4 months ago

            “The only point is, it explains why the numbers are down from Q1 2018. ”

            It does NOT explain why numbers are down from Q1 2018.

            The bottom falling out of the GPU mining craze (and product overhang as Lisa likes to call it) is the major contributor to numbers being down from Q1 2018 vs Q1 2019 and a continuing reduction in semi-custom revenue. Semi-custom should get a HUGE shot in the arm come Q4 2020 (PS5 launch) and hopefully MS Xbox Next not far behind. I’ll ask again did you listen to the earning call?

    • Mr Bill
    • 4 months ago

    I suppose they would not be confirming rumors about the 7-nanometer unless they were pretty sure they were on target for production and shipping.

      • blastdoor
      • 4 months ago

      It’s going to be a brave new world — AMD CPUs fabbed on a cutting edge process with no binding supply constraint.

        • WhatMeWorry
        • 4 months ago

        AMD has no supply constraint because demand is zero because there is no product yet. I suspect AMD/TSMC is going to see to see supply constrained out their yazoo once 7nm ships. But these are the kinds of problems you want.

          • Tvegas1980
          • 4 months ago

          Actually they addressed this problem the bought 7nm production from tmac before apple got their hands on it so they would be unimpeded.

            • blastdoor
            • 4 months ago

            Actually, Apple addressed this problem by selling far fewer iPhones than projected.

            The difference between actual and projected on the iPhone is more than enough space for AMD to inhabit.

        • Gadoran
        • 4 months ago

        Depends on clock speed. Qualcomm is delusional on 7nm performance, without many hopes about the effectiveness of 5nm.
        So only density is available nothing about better single core performance (IPC is right now at the limits)
        Proof of this are the two new Intel server cpus, Ice Lake Ep for many core, Cooper Lake Ep 14nm for raw performance.
        GloFo was right, these fine processes are for phones only……with big batteries obviously.
        Iphone sell less because its battery life is shorter than expected, Apple lied about it.

        Hopefully intel 7nm will be on new transistors, Fins are at the end.

        • tipoo
        • 4 months ago

        What’s insane is that if Intels leaked roadmap through 2021 is true, AMD could potentially be shipping on a 65% denser node than them. That’s unprecedented.

        [url<]https://i.redd.it/zszuh7ji58u21.png[/url<]

      • freebird
      • 4 months ago

      Yes, they have probably been in final mass production for several months to allow for testing, assembly and packaging. Need to build up inventory before launch day. 7/7/2019 should be an interesting date according to rumors. Lisa Su stated Epyc & Ryzen both launch in Q3 along with Navi (smaller version, performance/price under Vega7).

    • oldog
    • 4 months ago

    The breathtaking fall has actually been at Samsung. Tech hardware can be a brutal business.

    [url<]https://www.tomshardware.com/news/samsung-financial-results-q1-2019-profits-fall,39210.html[/url<]

      • Chrispy_
      • 4 months ago

      Well, 2-3 years ago Touchwiz was still awful, Note tablets exploded and caught fire, Samsung released curved-edge phones that are a PITA to live with (ghost swipes, reflections, very easy to smash etc), and Samsung have been one of the slowest Android phone vendors to update the OS on their devices.

      All those Samsung customers are likely to no longer be Samsung customers.

        • blastdoor
        • 4 months ago

        Imagine if either google lifted a finger to market pixel OR Chinese phone makers weren’t viewed as tools of the Chinese military. Samsung would be obliterated in either scenario.

        Lucky for them, neither scenario seems likely.

          • derFunkenstein
          • 4 months ago

          The Pixel is not as shiny and pretty as the Galaxy line, and that’s what sells. Not to mention coming up short on specs while still charging iPhone prices.

            • enixenigma
            • 4 months ago

            Pixels have been rather fugly and uninspired since the beginning. It has only been their software that has made them worth owning (speaking as someone who had an OG Pixel and is currently using a Pixel 2 XL). One has to wonder if Google want to avoid ticking off their hardware partners. Surely they could do better from a design standpoint.

            • derFunkenstein
            • 4 months ago

            Their software does make them worth owning, but I expect both a nice look and the software support (which STILL lags behind Apple; only 3 years of the latest OS for the Pixel 3 line) for iPhone money.

        • cynan
        • 4 months ago

        And that’s too bad. I’m actually enjoying using their new One UI on Android Pie on my S9. So much better than the Touchwiz of yore. Furthermore, updates for my phone have been showing up reliably.

        • albundy
        • 4 months ago

        yup, and i’m one of them. they literally ripped out every possible feature that the galaxy s5 had and they thought i was going to be stupid enough to fall for it. worst of all, i never realized why i had such poor call and signal quality being stuck with the galaxy 2, 3, 4, and 5 for many years, until i got an lg v20. it was like night and day. a breath of fresh air.

          • Chrispy_
          • 4 months ago

          Yes, I put my SIM card from a dead Moto Droid2 Turbo into an S7 and noticed an immediate drop in signal quality.

          Do Samsung use plastic antennae and radios made of cardboard, or something?

    • moose17145
    • 4 months ago

    I am still just happy to see AMD is still in the black. For such a long time they were in the red, that even if the overall profits are small, it feels good to see them at least making SOME money.

    Not really an AMD fanboy as much as I want Intel to keep having a competitor and I generally feel that market competition is a good thing.

      • Leader952
      • 4 months ago

      [quote<]I am still just happy to see AMD is still in the black. For such a long time they were in the red, that even if the overall profits are small, it feels good to see them at least making SOME money. [/quote<] That said they only had a profit of $0.01 in Q1. ONE FRIGGING PENNEY.

        • Chrispy_
        • 4 months ago

        [quote<]ONE FRIGGING PENNEY[/quote<] So within a tolerance of $0.005 to $0.015, multiplied by 1,005,299,000 shares* = somewhere between 5 and 15 million dollars. *source = NASDAQ

        • derFunkenstein
        • 4 months ago

        Per share, ya dingus.

          • Leader952
          • 4 months ago

          Obviously ya doofus.

            • freebird
            • 4 months ago

            I prefer the the less common spelling DUFUS!! : )

      • tipoo
      • 4 months ago

      It’s interesting seeing a company I’ve followed since I was a kid interested in technology, become the favorite YOLO stock around, lol

    • chuckula
    • 4 months ago

    TL;DR version: Intel will be going bankrupt in Q3.

    Sure, AMD [b<]COULD[/b<] have released Navi/RyZen 3000/etc. back in January just like the AdoredTV Youtuber* [b<]totally accurately claimed[/b<], but as you can clearly see with these results, AMD doesn't care about money! THANKS AMD! * That's not intended as a compliment

      • Krogoth
      • 4 months ago

      Comet Lake will rain on AMD’s parade of glued figures and chips!

        • Srsly_Bro
        • 4 months ago

        Comet lake will evaporate into vaporware.

          • Krogoth
          • 4 months ago

          The attack angle was too steep but at least it’ll make a nice light show.

        • freebird
        • 4 months ago

        As it approaches the Ry[b<]ZEN[/b<]2 sunshine... so by Q42020 there should be enough Ry[b<]ZEN[/b<]2 on the market to make this passing comet disappear into the night sky.

      • Mr Bill
      • 4 months ago

      Obligatory [url=https://www.youtube.com/watch?v=BcDQ99N0-Ds<]Comet Song[/url<]

      • Wirko
      • 4 months ago

      Of course they care about money. They just need to liquidate [url=https://www.amazon.co.uk/AMD-3-6GHZ-HD6570-Socket-Retail/dp/B0095VPAVE/ref=olp_product_details?_encoding=UTF8&me=&qid=1556753416&sr=1-1-catcorr<]old stock[/url<] first.

        • derFunkenstein
        • 4 months ago

        New price of £5,354.68 makes me laugh

      • WhatMeWorry
      • 4 months ago

      Tell me again when Intel is bringing 10nm to the desktop?

        • jarder
        • 4 months ago

        That’s Easy, 2016.

        Well, that’s according to this amusingly titled article from Feb 2015 “Intel at ISSCC 2015: Reaping the Benefits of 14nm and Going Beyond 10nm”:

        [url<]https://www.anandtech.com/show/8991/intel-at-isscc-2015-reaping-the-benefits-of-14nm-and-going-beyond-10nm[/url<]

        • psuedonymous
        • 4 months ago

        [quote<]Tell me again when Intel is bringing 10nm to the desktop?[/quote<]As soon as competition makes 14nm unviable. Remember, cost/transistor has continued rising since 28nm, so economic pressure is to stay on your mature process unless you [i<]need[/i<] a capability that the newer process offers that you current cannot. For 10nm, you're losing on both cost and peak clock rate, so that leaves perf/watt. AMD offer little to no competition on that front (see: battery life for every Ryzen-based laptop), and ARM is still beating their heads into the same it's-not-x86 wall they have since Windows RT.

      • Srsly_Bro
      • 4 months ago

      The bright side is that AMD’s HQ is in the same city. Sounds like an easy transition to me.

      • freebird
      • 4 months ago

      When does the ChuckulaTV channel go on-line?!? I want a subscription NOW! 😀

        • Krogoth
        • 4 months ago

        Shill-bucks are the only acceptable form of payment. 😉

        Glue is worthless.

      • Geonerd
      • 4 months ago

      Why MUST you troll every thread on this site?
      Give it a freaking rest, would you? Go crawl back under your bridge, where good trolls belong.

        • Mr Bill
        • 4 months ago

        Its a special talent and we actually like him.

      • nanoflower
      • 4 months ago

      Didn’t he say something about a problem showing up with Navi that required a respin? Wouldn’t be the first time an issue was discovered with a chip not long before they were supposed to have final silicon.

      • ronch
      • 4 months ago

      I’m too lazy right now to read your TL;DR. Could you please make it even shorter?

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