Sign in with
Sign up | Sign in
Your question

AMD loss larger then expected for Q4 and year

Last response: in CPUs
Share
January 18, 2008 2:34:23 AM

Actually, you have that bass-ackwards. AMD blew the street's estimate away, by more than 2x, at .17c. The 1.6B write down is non cash, and operating loss shrank to near 0 at (9m). Margins gained 3 points to %44, and guided Q1 in line with seasonality. So while some (most) headlines are spinning it as a massive loss, either that is a headline before understanding the results, or there is an agenda.
Most headlines have been updated to add that fairly significant information.

Something to note is that while ASP's are extremely low, and quad cores selling for not much more than the highest end dual core SKU's, margins increased. I'd say that points to exceptional yields among other things.
January 18, 2008 2:59:04 AM

I personally think their financial report is very fishy. 21M operational income for AMD, while 12M operational lost for ATi?

That's basically saying, AMD's CPU division is making money, while ATI is losing money? That doesn't jive well with what happens on the market today

- Barcelona stop ship and recalled
- Phenom stop shipped
- K8 X2s price drop

vs.
- RV670's selling figures
- ATI IGP design win for OEMs

I could be wrong, but I just don't think what they published sounds correct to me.
Related resources
January 18, 2008 3:11:22 AM

They are selling the crap out of old tech that the R&D has already been paid for. K8 apparently still sells very well. Even though Barcy had a stop ship, they are still selling them.

And, ATI could very well have lost money because they lost ALOT of business with Intel taking the ATI chipsets away from Intel based systems.

This is all pretty interesting really. AMD beat expectations, the stock is up about 5.5% after hours. If they can get things moving a little more smoothly they very well could post a gain next Q.
January 18, 2008 3:38:28 AM

piesquared said:
Actually, you have that bass-ackwards. AMD blew the street's estimate away, by more than 2x, at .17c. The 1.6B write down is non cash, and operating loss shrank to near 0 at (9m). Margins gained 3 points to %44, and guided Q1 in line with seasonality. So while some (most) headlines are spinning it as a massive loss, either that is a headline before understanding the results, or there is an agenda.
Most headlines have been updated to add that fairly significant information.

Something to note is that while ASP's are extremely low, and quad cores selling for not much more than the highest end dual core SKU's, margins increased. I'd say that points to exceptional yields among other things.



You are quite correct about the earnings. Assuming no 'funny business' has gone into the books, then these results are far and above what everyone, including the analysts, were expecting. So much so as to look exceptionally hopeful for AMD

Though I disagree that it points to exceptional yeilds. The ongoing transition to 65nm can yeild more dies per wafer, yet do so at a lower yeild than their 90nm process. The higher than predicted numbers could point to anyone of several things.


AMDs Quartely Earnings Press Release

In AMDs Press release, Mr Robert J. Rivet, AMD’s Chief Financial Officer, stated:
Quote:
We were close to break-even operationally for the quarter, reducing our fourth quarter non-GAAP operating loss to $9 million1. We improved gross margin by three points sequentially, driven by increased shipments of new products, higher average selling prices and cost containment actions,” said . “We shipped a record number of microprocessor units in the quarter, including nearly four hundred thousand quad-core processors


Looking at Mr Rivets statement, it would seem the corporate blood letting, slow down in the price war, and increased (not exceptional) 65nm production all contributed. Additionally, consider the $622 million investment and the sale (pending????/Completed????) of the 200mm wafer manufacturing equipment....all money in AMDs coffers.

Regardless of why, it looks really great, and goes a long way to restoring hope for AMDs future. Again, IF, the numbers have been 'optimized'.
January 18, 2008 3:43:33 AM

Yeah, that's the only thing. I am not saying that the numbers have not been modified, but I would also like to include that as a disclaimer.

If the numbers are indeed accurate, then it is starting to look much better.
January 18, 2008 3:51:49 AM

regardless of what team you bat for, this is good news not bad news. As stated above this is a good thing, not "very" good but good nonetheless.
January 18, 2008 12:31:34 PM

OMG. AMD is worth a fractien of what it paid for ATI. Do you guys think a market cap is what you put on your head when you go buy veggies? :) 

Anyway, I owe, I owe, so off to weld I go! Later!
January 18, 2008 12:36:14 PM

market cap lol

"darling, have you seen me market cap? im off to get some more carrots"
January 18, 2008 1:05:29 PM

weskurtz81 said:
Yeah, that's the only thing. I am not saying that the numbers have not been modified, but I would also like to include that as a disclaimer.

If the numbers are indeed accurate, then it is starting to look much better.


Agreed.

I'm concerned about hiding losses in the write down. But the news looks good and thats good for us consumers.
January 18, 2008 1:09:55 PM

piesquared said:
Actually, you have that bass-ackwards. AMD blew the street's estimate away, by more than 2x, at .17c. The 1.6B write down is non cash, and operating loss shrank to near 0 at (9m). Margins gained 3 points to %44, and guided Q1 in line with seasonality. So while some (most) headlines are spinning it as a massive loss, either that is a headline before understanding the results, or there is an agenda.
Most headlines have been updated to add that fairly significant information.

Something to note is that while ASP's are extremely low, and quad cores selling for not much more than the highest end dual core SKU's, margins increased. I'd say that points to exceptional yields among other things.


While I wouldn't say exceptional, I feel you are correct about all the other positive signs, like operating loss, margin and quarterly earnings.
January 18, 2008 1:12:03 PM

ImajorI said:
Agreed.

I'm concerned about hiding losses in the write down. But the news looks good and thats good for us consumers.


what you on about hiding losses i the write down? how would they have done that then?
January 18, 2008 1:20:48 PM

Ask Aurther Anderson and Fulbright & Jaworski They were Enron's accounting and legal people. THey hid Billions in losses for years. Yes its a concern.
January 18, 2008 1:28:16 PM

Mmm yes but amd would need to offer them more cash than any hidden losses might amount to to get an accountancy firm to do that, seeing as anderson was broken up as punishment for complicity.
January 18, 2008 2:43:07 PM

Yeilds are not exceptional. Point and case: You still can't get a high clocking Phenom. The whole tri-core line also points to low yeilds on the quads.


But once again: Where the hell are the K10 duals?
January 18, 2008 2:49:49 PM

TechnologyCoordinator said:
Yeilds are not exceptional. Point and case: You still can't get a high clocking Phenom. The whole tri-core line also points to low yeilds on the quads.


The lack of high clocking Phenom does not imply low yields -- it implies a mediocre process/design flaw. We've all seen the thermals of AMDs 65nm -- we know that they've increased the gate oxide. These things are *designed* to run slower to reduce the leakage current.

Tons of tri-core, on the other hand..... =)
January 18, 2008 3:46:31 PM

Please explain how its possible to write off GOODWILL and hide anything concerned with operational expenses in it? Anyone with the remotest idea of accounting would know that is not possible as goodwill is generally an intangible asset. Enron "hid" their losses by using fake shadow corporations and shifting around money they did not have between them, while having no standard for accounting, and not following GAAP (generally accepted accounting principals), which should have red-flagged immediately.
January 18, 2008 3:49:35 PM

"goodwill is generally an intangible asset" didnt one of their statements say that the billion plus loss was the write down of intangible assets?

Hence wite down of goodwill?
January 18, 2008 3:55:42 PM

spoonboy said:
"goodwill is generally an intangible asset" didnt one of their statements say that the billion plus loss was the write down of intangible assets?

Hence wite down of goodwill?


Correct, though in accounting there are three general areas. Income (or loss) from Operating, Investing, and stockholders equity + intangible assets. My question was how can you hide the loss of operating in goodwill (intangible asset) loss? It would be blatantly obvious on their K10.
January 18, 2008 6:50:50 PM

There are many shady ways to obscure an operational cash loss, but goodwill is not one of them.

Without scrutinizing their core accounting practices (what auditors are paid to do), the fourth-quarter report appears strong in context and suggests they are recovering quickly toward sustainability.

While goodwill is intangible and has no direct bearing on how far AMD is from bankruptcy, a loss here is simply an admission that AMD wasted stockholder value. The market value of AMD was already corrected for the goodwill loss before the 4th quarter announcement - we all saw the steady but dramatic decline, which was not simply due to concerns about the future of its product lines. AMD is just admitting, in retrospect, that it basically handed out free checks and stock certificates for nothing in return (by however much it overpaid for ATI). It diluted its own shares and emptied its coffers in the past; a summary report of what it lost won't suddenly make it insolvent.
January 18, 2008 7:13:56 PM

ryman554 said:
The lack of high clocking Phenom does not imply low yields -- it implies a mediocre process/design flaw. We've all seen the thermals of AMDs 65nm -- we know that they've increased the gate oxide. These things are *designed* to run slower to reduce the leakage current.

Tons of tri-core, on the other hand..... =)



True.

But by low yeild, I don't mean how many chips are thrown away, but rather how they bin.


For example, let's pretend that AMD makes outrageous claims that their processors are going to be 40% better. But then AMD finds out that in order to achieve that they have to clock it at 3ghz. So AMD starts churning out engineering samples and is able to get enough of them to hold a press event at a random location, let's say tahoe.

However, AMD quickly discovers that their processors aren't binning where they need them to bin in order to make a product that even competes with Intel's year-old quad core. AMD is forced to bin the chips at LOW speeds.

In my mind, where the chips are binning is part of yeild, now technically I may be incorrect.


So allow me to restate:

AMD can't get their chips to clock high and they're forced to yard-sale them.
January 18, 2008 7:19:39 PM

I'm not sure why all the Intel fanboys are slobbering like rabbid donkeys at the hopes of AMD crashing and burning. Yes you love Intel today... but tell me how much you will love them if AMD bankrupts and you have no other purchasing options for the forseeable future. No matter how much you may hate AMD, without them things would really start to suck in the PC world really quick.
January 18, 2008 8:45:04 PM

el_brio said:
I'm not sure why all the Intel fanboys are slobbering like rabbid donkeys at the hopes of AMD crashing and burning. Yes you love Intel today... but tell me how much you will love them if AMD bankrupts and you have no other purchasing options for the forseeable future. No matter how much you may hate AMD, without them things would really start to suck in the PC world really quick.


That's our point. If AMD doesn't stop BLEEP-ing up, they will go bankrupt.

Sitting here praising AMD for failure after failure won't help their situation.

You do realize Barcelona still isn't available, right? It going to show up in late Q2 (best case), ever a full year late.
a c 123 à CPUs
a b À AMD
January 18, 2008 8:51:34 PM

yomamafor1 said:
I personally think their financial report is very fishy. 21M operational income for AMD, while 12M operational lost for ATi?

That's basically saying, AMD's CPU division is making money, while ATI is losing money? That doesn't jive well with what happens on the market today

- Barcelona stop ship and recalled
- Phenom stop shipped
- K8 X2s price drop

vs.
- RV670's selling figures
- ATI IGP design win for OEMs

I could be wrong, but I just don't think what they published sounds correct to me.


I agree with you. You also have to consider that there was quite a handful of people that either got sick of waiting for Phenom or were dissapointed and switched to C2Q. Or they just stick with what they have until May if the B3's turn out any good.

So in all I don't really see how AMD could have been making enough cash to cover for the low priced Phenoms and production costs unless they have already implimented their "FAB lite" strategy and are having their chips produced somewhere else without telling anyone. Also with the fact that their 65nm process is not as mature and cannot yeild as many as Intels process it seems weird that ATI would lose more money than AMD. I didn't expect ATI to gain any cash inflow since they are not doing very well but still it seems weird to me.

But I really doubt AMD would risk letting false income reports out as that would cause them a major headache with the Government.
a b à CPUs
January 18, 2008 9:26:13 PM

^Agreed. The 38xx are pretty good price vs. performance cards.
January 19, 2008 3:31:39 AM

disclaimer: After a "FEW" alcoholic beverages, I think I can sum this thread up pretty well. ;) 

It seems most people have negative view of AMD right now, so even though the 4Q results were better than expected, they still want to be negative in regards to AMD.

I noticed the negative posts in the thread about the predictions for the 4th quarter. That thread went on for pages and pages. This thread however has yet to break 1 page.

In all honesty it seems that many of the users actually only care if they fail. It might be because they don't want them to fail, but it seems like alot of people in the forums actually want them to fail.

The reason I say this is because this is basically a positive thread for AMD.... about the only one. Not nearly as many people are posting, but the negative threads go on for pages as I said.

(possibly to many drinks.... was this post at least coherent?)
January 19, 2008 6:51:36 AM

You are correct.
Even though this should be a positive spin for AMD, there are those who wont give credit where it's due. Most of the "ifs" posted fall in the category of criminal. Hector and the crew may have had "problems" but they have not broken any laws.
AMD is over $7. now, while Intc has dropped almost 25% in the last few days. Some would say that is due to market instability, but personally I see it as more cause than effect.
Some of the teter toter effect is probably from the price war. Somehow AMD has seemed to bounce back, while Intel is forgoing trunks full of money. You have to remember that Intel sells 4 times the chips that AMD does. For ever dollar they cost AMD, Intel must take a pass on $4.
Investors seem to be saying "It's too high a price, when you aint winning the war"
January 19, 2008 8:30:13 AM

"Additional Quarterly Highlights


The Quad-Core AMD Opteron processor was named Chip of the Year by CRN. The publication called the processor a "game changer" because of its blend of "blazing" speed and energy efficiency."




Umm, what exactually is this referring to? Did I miss something?
January 19, 2008 11:59:41 AM

weskurtz81 said:
disclaimer: After a "FEW" alcoholic beverages, I think I can sum this thread up pretty well. ;) 

It seems most people have negative view of AMD right now, so even though the 4Q results were better than expected, they still want to be negative in regards to AMD.

I noticed the negative posts in the thread about the predictions for the 4th quarter. That thread went on for pages and pages. This thread however has yet to break 1 page.

In all honesty it seems that many of the users actually only care if they fail. It might be because they don't want them to fail, but it seems like alot of people in the forums actually want them to fail.

The reason I say this is because this is basically a positive thread for AMD.... about the only one. Not nearly as many people are posting, but the negative threads go on for pages as I said.

(possibly to many drinks.... was this post at least coherent?)


Your absolutely right, and Im glad someones come out and said it. Many had convinced themselves AMD were gonna post some terrible numbers for Q4, then the opposite happens and they can't believe it, acting bemused and saying that the books must have been cooked. Face it, it's the continuation of a turnaround and you didn't see it happening. AMD not being a big cheese on the tomshardware forums doesn't mean they can't make money. What I like is they have approached break-even even without tlb errata free phenoms, imagine the outlook for next year.
January 19, 2008 5:05:39 PM

Well, that's what it seems like.

Most of the people in the forums were real quick to get it on the bashing in the other threads. Now, look at this thread, only a handful of people have bothered posting.

And even those regular bashers that did post in here, only posted a few times.

I don't know, maybe there isn't much to it.

Like I said when I was "buzzed" last night, it just seems like we have a lot of haters here that claim they aren't. They only want to see a failure, which is why they haven't posted in this thread.
January 19, 2008 6:20:24 PM

2007 was a great year for semi-conductor companies by and large yet AMD still couldn't manage to post a profit. What do you think is going to happen to AMD if 2008 turns out to be a crap year for semis? AMD now has cumualtive retained earnings of NEGATIVE 3.1 billion dollars. Face it people, AMD has never and will never be a financially viable company.

January 19, 2008 6:30:03 PM

All I can say is: Thumbs UP AMD.

They really seem to be able to work when held in the cable by the any opponent they might have.

One thing that might explain how thay made money would be if tehy make at least al little money on every CPU they sale anyone know if they are stockpiling any or selling all they produce? (except stop ship miodel)

Evil Intel will get destroyed!!! Err no lol. Both will still be there and give us great price.
January 19, 2008 10:27:42 PM

AMD's inventory continues top show a consistant level. They are moving everything they produce.
On the other hand Intel's inventory showed a growth of 70%.
Since Intel has generally run a 10% inventory, it suggests that they sold 7 % fewere chips in 07, than expected. Actually, those sales went missing largely in Q4. With Q1 being a rather slow pereiod, it's a poor quarter to start with so large an overstock.
January 19, 2008 11:00:10 PM

AMD closed up Friday, Intel closed down. Intel made a profit, issued a dividend, but failed to meet investors' expectations by about .02USD. Amd made a loss, about .17USD per share, but the investors expected a loss of .38USD.

Go figure.
January 19, 2008 11:10:43 PM

croc said:
AMD closed up Friday, Intel closed down. Intel made a profit, issued a dividend, but failed to meet investors' expectations by about .02USD. Amd made a loss, about .17USD per share, but the investors expected a loss of .38USD.

Go figure.
The "market" expectations were not met by either. Expectations are already factored in before the actual release. AMD is doing better because expectations had them loosing thier shirt. Reality set in, and made them look as though they are at least hanging in, and seem able to endure, and even grow a bit, in the environment of Intel's superior tech, and the brutal price war.
On the other hand, Intel's profits did not reflect thier superior position, and the massive increase in Intel's inventory suggests they did not sell as many chips as expected.
It's never a good idea to go into a slowdown (wether seasonal or market related) witrh excess inventory.
January 19, 2008 11:27:19 PM

Ahhh, when will people realize that AMD's position on the stock market, and in sales largely has nothing to do with what Tom's and anands and other sites say about their chips performance numbers. 25% maybe has to do with these, because AMD seems to depend a lot on enthusiast sites for advertising and getting word of mouth out, which works fine when your chips are superior. They seem to be doing ok on the HD3800 front for example even on review sites.

But, I think it's good news though, and I hope they can keep up the recovery.
January 20, 2008 7:00:58 PM

Mathos,

I thought people were already aware of this, and that this has been proven with the P4 days. They are selling CPU's based on price right now, and they seem be get getting efficient enough to be able to make a profit doing it this way in the near future.
January 21, 2008 12:34:20 PM

endyen said:
The "market" expectations were not met by either. Expectations are already factored in before the actual release. AMD is doing better because expectations had them loosing thier shirt. Reality set in, and made them look as though they are at least hanging in, and seem able to endure, and even grow a bit, in the environment of Intel's superior tech, and the brutal price war.
On the other hand, Intel's profits did not reflect thier superior position, and the massive increase in Intel's inventory suggests they did not sell as many chips as expected.
It's never a good idea to go into a slowdown (wether seasonal or market related) witrh excess inventory.


Intel missed their target by something in the area of 104 million, or I should say they missed Wall Streets target. 104 million in light of a slowing American econonmy is pretty damned good if you as me. :love: 

But your EU so. :kaola: 

Word, Playa.
January 21, 2008 2:44:01 PM

This is AMD comback year.Intel liking the 3870X2 speaks volumes.SB700 looking good,R700,xellieon,Phenom/Barcy(yep them too)and so much more.This wont be a great year for Intel with AMD stepping it up and for Nvidia its really not looking good .The wins which will be few will be hard wins
a b à CPUs
a b À AMD
January 21, 2008 3:02:32 PM

yomamafor1 said:
I personally think their financial report is very fishy. 21M operational income for AMD, while 12M operational lost for ATi?

That's basically saying, AMD's CPU division is making money, while ATI is losing money? That doesn't jive well with what happens on the market today

- Barcelona stop ship and recalled
- Phenom stop shipped
- K8 X2s price drop

vs.
- RV670's selling figures
- ATI IGP design win for OEMs

I could be wrong, but I just don't think what they published sounds correct to me.


I think the CPU division is doing much more than Phenom. They also make money from selling parts for consoles, cell phones, embedded devices. It's possible that these have made up for the Phenom troubles.
January 21, 2008 3:55:11 PM

weskurtz81 said:
Well, that's what it seems like.

Most of the people in the forums were real quick to get it on the bashing in the other threads. Now, look at this thread, only a handful of people have bothered posting.

And even those regular bashers that did post in here, only posted a few times.

I don't know, maybe there isn't much to it.

Like I said when I was "buzzed" last night, it just seems like we have a lot of haters here that claim they aren't. They only want to see a failure, which is why they haven't posted in this thread.


Ok, being that I'm one of those who has been hard on AMD, I'll give my side of the story here. By the way, I've been using AMD chips since 2001, so its not like I'm an Intel fanboy.

The analyst predictions were for a 36 cent loss per share. AMD claims only a 17 cent loss per share. That's a big difference, so what happened and how did it happen? On top of that, there was the write off for the ATI division. So the expectations were for continued huge losses. I used to do some accounting and my son is an accountant, so it fair to say that both of us don't know how such a large discrepency can occur. We can't say there is something fishy here, but it sure looks like it.

If all that AMD claims is true, then there seems hope indeed for AMD. At the same time, AMD needs to get the Phenom and Barcelona fixed and into production. Until that happens, they can't start making money. with the decrease that AMD itself reported in R&D, it also means that they can be expected to be later on the next line of chips. I like AMD, but I'm not blind and I'm not willing to buy a poor performing Phenom. I've waited for a long time in building a computer just for a Phenom chip. But it doesn't work as expected, and my expectations weren't based on my own imagination, but on what AMD was saying about how well K10 would perform. I don't hate AMD, not by a long shot, but I am disappointed. I don't want AMD to fail. God forbid that happens, but I do want AMD to produce a chip that I think is worth buying.


As for AMD stock, I've traded it for some profits through the past. That said, even with the reported good news that the losses weren't as bad as expected, I'm unwilling to invest in it at the moment. Its still too risky, and the market in general is risky right now, but I think there are better places to invest my money. I may be wrong in that, but I've guessed wrong before and will guess wrong again in the future. After 40 years of investing, I've learned that there are occasional mistakes and I don't sweat them. I look instead to the places where I've made so much that the mistakes don't hurt too much.
!