AMD Q2 Loss Worse Than Expected; Stock Slumps in After-Hours Trading

[TechnologyCoordinator]

http://blogs.barrons.com/techtraderdaily/2009/07/21/amd-q2-loss-worse-than-expected-shares-down-10/

Advanced Micro Devices (AMD) this evening reported Q2 sales ahead of estimates but a much-deeper-than-expected net loss and a disappointing Q3 outlook.

AMD revenue was flat with the first quarter at $1.18 billion, with a net loss of 62 cents per share on a non-GAAP basis.

That compares to an average estimate for $1.13 billion in sales and a net loss per share of 46 cents, excluding some expenses. The revenue was a bit better than AMD’s own forecast for revenue to decline from the $1.18 billion it recorded in Q1.

AMD expects sales to be up slightly in the current quarter, which is rather disappointing relative to the $1.21 billion currently forecast by the Street.

AMD shares were down 48 cents, or 12%, at $3.60 after falling 2% during the regular session.

AMD lost $330 million this quarter. AMD is still hemorrhaging money each quarter. It makes one ask, how much longer can AMD post quarterly losses measured in the fractions of a billion before they go under?

Good luck green team, but it's not looking any better....




Also see:
http://www.google.com/hostednews/ap/article/ALeqM5gYIuaLqKKo0_-qq87WbzIZHy_MiwD99J2AD02
http://www.streetinsider.com/Press+Releases/AMD+Reports+Second+Quarter+Results/4808483.html
http://moneycentral.msn.com/inc/news/providerredir.asp?feed=AP&date=20090721&id=10159986
http://www.amdzone.com/phpbb3/viewtopic.php?f=52&t=136525

 

[paranoidmage]

They should have some money laying around from the sell off their manufacturing business. I don't think bankruptcy will be a problem anytime soon. As long as they keep up R&D, they will innovate. The GPU business seems to be win for them, and the CPU market isn't as bad as it was when Core 2 was released or when they started shipping Phenoms with the TLB bug.

 

[Amiga500]

They need to get cacheless K10b (Propus) out the door, and fast.

Then remove the existing mid-range Phenom IIs from the market. The dies are too big for the retail price.


But, really, at best they are treading water until a new uarch is produced as the K10 family simply is not quick enough.

 

[TechnologyCoordinator]

But, really, at best they are treading water until a new uarch is produced as the K10 family simply is not quick enough.

Agreed. PII is a big step in the right direction, but they seem to need more of a giant leap than "big steps". This news might make a good AMD stock purchasing opportunity, that is you feel they will survive.

 

[paranoidmage]

Fusion won't be out for a long time. Apperently we won't see in until Q3 or Q4 2010. Does anyone know what their plans are between now and then, because a whole year without new processors seems like a long time.

The X4s and X3s without L3 cache should help though.

 

[jennyh]

All things considered, that's not bad.

It's $100m less than last quarter. On top of that, they've had to deal with 40nm issues at TSMC completely ruining their 4770 sales. With the 40nm problems almost completely ironed out, it's going to be better next quarter again.

3rd quarter will still probably be a loss, but there will be huge gains in the graphics market as they are the only dx11 manufacturer out this year. They'll be in the black Q4 this year, I guarantee it.

 

[TechnologyCoordinator]

They'll be in the black Q4 this year, I guarantee it.

LOL. I hope so! But I'm doubting it though...

 

[paranoidmage]

I think they are really pushing Nvidia out of the market. The only way Nvidia will be able to compete with 5000 series Radeons is to make a bigger more expensive die than the G200, which is already way too expensive to manufacture.

 

[pauldh]

Ouch, and then we get this news too:
http://www.tomshardware.com/news/intel-core-pentium-price-cuts,8306.html

 

[paranoidmage]

I think that move was done to help clear inventory a bit also. AMD will need some serious price drops when Lynnfield comes around. Their Phenom X4s won't be competitive at all.

 

[jennyh]

Intel's results look a lot better than they are this quarter, because they shifted a lot of inventory on the cheap. That's going to come back to haunt them soon because people who bought cheap quad's aren't going to be buying lynnfield.

 

[fazers_on_stun]

They should have some money laying around from the sell off their manufacturing business. I don't think bankruptcy will be a problem anytime soon. As long as they keep up R&D, they will innovate. The GPU business seems to be win for them, and the CPU market isn't as bad as it was when Core 2 was released or when they started shipping Phenoms with the TLB bug.

Actually, if you look at AMDs report, it shows ATI lost another $12M for the just-ended quarter. ATI has only made a profit in one quarter - $1M in the first quarter of 2009, and has lost $38M, $11M and $25M respectively in previous quarters. Main reason seems to be the low ASPs on GPUs. Apparently AMDs "marketshare at all costs" philosophy is wreaking havoc on the ATI front as well nowadays.

Even GF lost $101M for AMD last quarter.

R&D expenditures were $425M for the quarter, but $119M of that was for GF, I would guess for transitioning to 32nm.

 

[TechnologyCoordinator]

Intel's results look a lot better than they are this quarter, because they shifted a lot of inventory on the cheap. That's going to come back to haunt them soon because people who bought cheap quad's aren't going to be buying lynnfield.

And even worse for AMD, as they'll have to drop prices even further to match Intel's price drops.

 

[TechnologyCoordinator]

Actually, if you look at AMDs report, it shows ATI lost another $12M for the just-ended quarter. ATI has only made a profit in one quarter - $1M in the first quarter of 2009, and has lost $38M, $11M and $25M respectively in previous quarters. Main reason seems to be the low ASPs on GPUs. Apparently AMDs "marketshare at all costs" philosophy is wreaking havoc on the ATI front as well nowadays.

Even GF lost $101M for AMD last quarter.

R&D expenditures were $425M for the quarter, but $119M of that was for GF, I would guess for transitioning to 32nm.

Wow... Hard to argue with facts. I hadn't dug deep, I thought ATI was making money.

 

[fazers_on_stun]

Then remove the existing mid-range Phenom IIs from the market. The dies are too big for the retail price.

So true, esp. for Istanbul which is ~50% larger die size than Shanghai, and they can't sell them for much given the Nehalem Xeons performance.

But, really, at best they are treading water until a new uarch is produced as the K10 family simply is not quick enough.

Haven't seen much news on Bulldozer in some time now. Well, other than some Theo Valich regurgitated "news" that is .

 

[TechnologyCoordinator]

Well, other than some Theo Valich regurgitated "news" that is .

Excellent use of quotation marks!

 

[fazers_on_stun]

But I'm doubting it though...

Along with just about all the other people here with more than primitive reasoning skills .

Many analysts expect continuing losses for AMD for the next 2 years. But of course they don't provide a "guarantee"

 

[fazers_on_stun]

Wow... Hard to argue with facts. I hadn't dug deep, I thought ATI was making money.

Far from it - I forget what the interest on the acquisition debt for ATI is, but ATI would have to make a heck of a lot of profit on sales just to break even on the books.

Fusion had better be a real game-changer; otherwise the ATI purchase will prove to be a disastrous business decision... Even though the chipset support is now good, it won't offset the negatives.

 

[fazers_on_stun]

Excellent use of quotation marks!

From Wiki: A folk etymology incorrectly suggests that it (news) is an acronym of the cardinal directions: north, east, west, and south.

In Theo's case, strictly from the south .

 

[exit2dos]

I think the scariest number is that AMD only pulled a 37% Gross Margin. A large chunk of that was in selling off it's old equipment (written off last quarter) - which brings its adjusted margin down to 27%.

In comparison, Intel was dissapointed that it was down to 50.8% last quarter.

Hopefully, with AMD moving completely to 45nm, they will be able to raise this margin in Q3, but with Intel lowering the ASPs, AMD might have a hard time of getting above (an actual, adjusted) 30%.

 

[exit2dos]

Fazers - did you just use the word "Theo" twice on one page?


::Vomit::

 

[jennyh]

Fazers you must be a bit gutted once more. Yet another AMD loss and they just refuse to die like you predicted what, 1 year ago?

Losses are down, R&D is up and they've had a few problems outwith their control. It's looking a lot better than it has been....and if they were really desperate to make a profit one quarter they'd just stop R&D right?

 

[TechnologyCoordinator]

Fazers you must be a bit gutted once more. Yet another AMD loss and they just refuse to die like you predicted what, 1 year ago?

Losses are down, R&D is up and they've had a few problems outwith their control. It's looking a lot better than it has been....and if they were really desperate to make a profit one quarter they'd just stop R&D right?

Can't say I agree! AMD is bleeding out money quarter after quarter. Their annual losses are still running in the billions, quarterly losses, such as this one, always seem to exceed a quarter-billion dollars, and AMD has been selling itself to survive.

AMD is on life support. The economy isn't helping either!

 

[jennyh]

It's not 'in the billions', so far it's $700m this year. It's a helluva lot better than it has been in the past.

The fact that they are still throwing $100's millions at R&D proves that they are being backed in what they do. With an upturn in the economy and TSMC not dragging them down, the continuing fall of Nvidia and a bit of luck which every company needs, they'll be well on the road back.

 

[TechnologyCoordinator]

It's not 'in the billions', so far it's $700m this year. It's a helluva lot better than it has been in the past.

You do know that "annual losses ... in the billions" refers to the timeframe of a year. You then said, "Oh yeah, it's halfway through the year and they're only 70% of the way toward a billion dollar loss!"

Doesn't make sense now, does it? AMD is on pace to lose 1.4 billion dollars in 2009 at the current rate for H1 2009 of .7B per half.


AMD has no choice but to invest in R&D to improve their weak (but stronger than Phenom I) product offerings. You can't just turn down R&D for a quarter, R&D is people and brains. If you fire them for a quarter they will find jobs elsewhere and you'll kill your company.