AMD loss larger then expected for Q4 and year

piesquared

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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.
 

yomamafor1

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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.
 

weskurtz81

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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.
 

turpit

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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:
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'.
 

weskurtz81

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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.
 

yay

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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.
 

OlSkoolChopper

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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!
 

ImajorI

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Agreed.

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

ImajorI

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While I wouldn't say exceptional, I feel you are correct about all the other positive signs, like operating loss, margin and quarterly earnings.
 

spoonboy

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what you on about hiding losses i the write down? how would they have done that then?
 

ImajorI

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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.
 

spoonboy

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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.
 

ryman554

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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..... =)
 

xerohour

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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.
 

spoonboy

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"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?
 

xerohour

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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.
 

WR

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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.
 



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.
 

el_brio

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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.
 


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.