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

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July 21, 2009 8:40:09 PM

http://blogs.barrons.com/techtraderdaily/2009/07/21/amd...

Quote:
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/ALeqM5gYIua...
http://www.streetinsider.com/Press+Releases/AMD+Reports...
http://moneycentral.msn.com/inc/news/providerredir.asp?...
http://www.amdzone.com/phpbb3/viewtopic.php?f=52&t=1365...
July 21, 2009 8:59:11 PM

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.
July 21, 2009 9:10:15 PM

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.
July 21, 2009 9:14:17 PM

Amiga500 said:
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.
July 21, 2009 9:22:20 PM

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.
a b à CPUs
July 21, 2009 9:22:54 PM

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.
July 21, 2009 9:28:54 PM

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


LOL. I hope so! But I'm doubting it though...
July 21, 2009 9:29:32 PM

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.
July 21, 2009 9:40:27 PM

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.
a b à CPUs
July 21, 2009 9:51:10 PM

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.
a b à CPUs
July 21, 2009 9:52:48 PM

paranoidmage said:
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.
July 21, 2009 9:55:00 PM

jennyh said:
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.
July 21, 2009 9:55:43 PM

fazers_on_stun said:
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.
a b à CPUs
July 21, 2009 9:58:00 PM

Amiga500 said:
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.

Quote:

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 :) .
July 21, 2009 10:03:50 PM

fazers_on_stun said:
Well, other than some Theo Valich regurgitated "news" that is :) .


Excellent use of quotation marks!
a b à CPUs
July 21, 2009 10:07:32 PM

TechnologyCoordinator said:
But I'm doubting it though...


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

Many analysts expect continuing losses for AMD for the next 2 years. But of course they don't provide a "guarantee" :sol: 
a b à CPUs
July 21, 2009 10:16:02 PM

TechnologyCoordinator said:
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.
a b à CPUs
July 21, 2009 10:20:02 PM

TechnologyCoordinator said:
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 :D .
July 21, 2009 10:23:40 PM

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%.
July 21, 2009 10:25:16 PM

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


::Vomit::
a b à CPUs
July 21, 2009 11:16:51 PM

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? :D 
July 21, 2009 11:21:58 PM

jennyh said:
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? :D 


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!
a b à CPUs
July 21, 2009 11:28:57 PM

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.
July 21, 2009 11:37:13 PM

jennyh said:
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.
a b à CPUs
July 21, 2009 11:52:09 PM

Except they aren't on pace to lose $1.4 billion because all companies make a lot more cash in the 2nd half than they do the first half.

What was it last quarter? $440 million. Now $340 million with TSMC ruining ATI's margin - if not for that it could easily have been $220 million or half Q1. If TSMC hadn't messed up their 40nm would ATI would still have lost cash? Not a chance in hell.

The only reason AMD are still losing cash is because of the recession.
July 21, 2009 11:56:08 PM

jennyh said:
Except they aren't on pace to lose $1.4 billion because all companies make a lot more cash in the 2nd half than they do the first half.

What was it last quarter? $440 million. Now $340 million with TSMC ruining ATI's margin - if not for that it could easily have been $220 million or half Q1. If TSMC hadn't messed up their 40nm would ATI would still have lost cash? Not a chance in hell.

The only reason AMD are still losing cash is because of the recession.



Only one problem there.... AMD DOESN'T MAKE MONEY! THEY LOSE IT!

AMD is on track to lose ANOTHER billion this year, despite your optimistic math.
a b à CPUs
July 22, 2009 12:04:52 AM

Oh dear *another* billion, who cares? Obviously not AMD's backers for sure. :D 

Perhaps they are being secretly bankrolled by IBM...or wait even better - the European Union!
July 22, 2009 12:14:17 AM

fazers_on_stun said:
Fusion had better be a real game-changer

And they better hope Larrabee isn't a complete game-changer, because I've heard no news (or even rumors) suggesting that they have anything remotely like it. Interesting times ahead, to be sure...
July 22, 2009 12:14:31 AM

jennyh said:
Oh dear *another* billion, who cares? Obviously not AMD's backers for sure. :D 

Perhaps they are being secretly bankrolled by IBM...or wait even better - the European Union!


Actually, it's the United Arab Emirates, and it's not a secret.


You are confusing the emotional "backers" with the real-world "investors".
a b à CPUs
July 22, 2009 12:16:36 AM

< Selling tinfoil hats for $1 each, all profits go to 'save AMD'.
a b à CPUs
July 22, 2009 12:22:01 AM

Bad management. Forming Global Foundries should help though. We'll see what happens.
July 22, 2009 12:47:09 AM

jennyh said:
< Selling tinfoil hats for $1 each, all profits go to 'save AMD'.


LOL, put me down for the X4 TinFoil TWKR hat please.
a b à CPUs
July 22, 2009 12:58:24 AM

By sheer coincidence, 4 is the number of class action investigations intel have going against them currently.

http://www.classadvocate.com/?direct=y&category=defenda...

Only two of them are for *blatently* ripping off those unfortunates who actually bought intel however, so I guess the average pc illiterate ignoramus with 'intel inside' can be happy about that, right? :D 
July 22, 2009 1:13:51 AM

jennyh said:
By sheer coincidence, 4 is the number of class action investigations intel have going against them currently.

http://www.classadvocate.com/?direct=y&category=defenda...

Only two of them are for *blatently* ripping off those unfortunates who actually bought intel however, so I guess the average pc illiterate ignoramus with 'intel inside' can be happy about that, right? :D 


Ah yes, because AMD is innocent... http://www.techpowerup.com/65970/ATI_(AMD)_and_NVIDIA_Fix_Prices_in_the_US_Class_Action_Slapped_Against_them.html


Just kiddin', it's against ATI before AMD bought them, it was the best I could do.
July 22, 2009 1:18:07 AM

sonoran said:
And they better hope Larrabee isn't a complete game-changer, because I've heard no news (or even rumors) suggesting that they have anything remotely like it. Interesting times ahead, to be sure...



Let's see...they have GPU tech and CPU tech. To me that spells Larrabee. They have nothing like it now but they certainly have the ability to whip up a chip like it.

I'm beginning to wonder if Fusion is a CPU with cheap integrated graphics or a viable Larrabee competitor.
July 22, 2009 4:35:21 AM

paranoidmage said:
Let's see...they have GPU tech and CPU tech. To me that spells Larrabee. They have nothing like it now but they certainly have the ability to whip up a chip like it.

I don't think you understand just how different Larrabee is from today's GPUs: Doubtful AMD could just "whip up a chip like it."

Both Larrabee and Fusion are potential game changers. But which the market will go for remains anyone's guess. Maybe there's room for both (so long as programmers can just code to a common API)?
July 22, 2009 5:04:02 AM

What I meant was that Larrabee will have properties of a GPU and of a CPU. I guess my choice of words was bad. AMD probably can't "whip up" a competing chip, but they, better than any other company, could make a competing product because they have their CPU background and ATI's GPU background. They have the ability to put the two together to make a competing product.

And your right, if you look deeper at Larrabee's architecture, the chip is really complex and totally different from anything AMD has. AMD doesn't have the resources Intel does, and probably won't be able to make such a different chip.
July 22, 2009 5:32:02 AM

jennyh said:
Oh dear *another* billion, who cares? Obviously not AMD's backers for sure. :D 

Perhaps they are being secretly bankrolled by IBM...or wait even better - the European Union!

Eh it's been the story of AMD's life for like the past 2-3 years i just don't think people see it too much of a surprise. But AMD is making up market share and profits again. Only problem is that they have huge cpu's! kinda the argument in ATI vs Nvidia where Nvidia has the large dies so their profits from selling them would be less as you make less with larger dies etc everyone knows this...
July 22, 2009 8:19:09 AM

Things are looking grim for AMD. No truly new CPU until 2011... Perhaps 32nm will keep them afloat.
July 22, 2009 9:29:11 AM

I think for them to stay afloat they'll need to drop the 955 price down to $150 and the 965 will need to be $175, then they need to rush out 28nm in Q2 2010 or heavily invest in graphite or Quantum development and then get those on the market before intel.
a b à CPUs
July 22, 2009 12:05:24 PM

I see the big issue being the lack of a competitive CPU. Lets face it, the PII's are competing against C2Q's, which intel is now cutting the price on the clear stock. Thus, Intel can increase its marketshare, and stick it to AMD at the same time.

Quads being <$200 is the worst thing that could have happened to AMD. The C2D line is simple more well known, and if you give the common consumer the choice between a C2D and a PII, guess which way they go? AMD has to cut prices to compensate, which cuts into their margins.

Image how bad things would be for them if the 4000 series GPU had flopped. AMD is holding on by a thread, and only an improved product line is keeping them alive. They won't go under, but they may retreat to the server market for a bit...
a b à CPUs
July 22, 2009 1:06:57 PM

exit2dos said:
Fazers - did you just use the word "Theo" twice on one page?


::Vomit::


Sorry - what wuz I thinkin'?? :D 

I guess invoking the name of he who causes regurgitation goes against the "Theo-cracy" :sol: 
a b à CPUs
July 22, 2009 1:13:31 PM

jennyh said:
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? :D 


No - you must have mistaken me for a fanbois :D . I never predicted AMD would go BK, nor have I "guaranteed" any company's performance, unlike yourself :whistle: 

What I actually said several months ago was that AMD would be in trouble by the end of the year if they don't turn their business around by then, or receive another cash infusion from Abu Dhabi. That's pretty plain from their balance sheet, although they do seem to have more cash on hand than previously - probably the buyout from the GF spinoff.

I'm so glad that you think a third of a billion dollar loss is good news for AMD. Remind me to never consult you for any financial advice. Please. :sol: 
a b à CPUs
July 22, 2009 1:22:49 PM

well if fusion brings 4770+ (maybe 4850?!) performance into midrange (now it would be nearing high end OEM believe it or not) pcs without the need of additional pcie lane and support for it next year for OEMs then there will be blood.....

if they bring intel GMA performance into cheapo machines, there will also be blood, but it'd be their own...
a b à CPUs
July 22, 2009 1:32:26 PM

jennyh said:
Except they aren't on pace to lose $1.4 billion because all companies make a lot more cash in the 2nd half than they do the first half.

What was it last quarter? $440 million. Now $340 million with TSMC ruining ATI's margin - if not for that it could easily have been $220 million or half Q1. If TSMC hadn't messed up their 40nm would ATI would still have lost cash? Not a chance in hell.

The only reason AMD are still losing cash is because of the recession.


You seem to mistake AMD for a normal company, one with an actual profit motive, perhaps like Intel? :D  Did you even read AMD's quarterly report? Their estimate for Q3 is "flat". Considering the hammering their stock is getting this morning due to underperforming the already low street expectations, I'd bet Q3 may be worse than what AMD is projecting.

And forget about trying to pin all this on TSMC -graphics is only a fraction of the CPU market, plus what about all the other enormously lossy quarters for AMD -if the fault of TSMC, dontcha think AMD would have smarted up by now and moved its business to another 3rd party fab??

Finally, we ain't out of the global recession just yet. It'll take at least the rest of this year and probably more before the world economy recovers.
a b à CPUs
July 22, 2009 1:35:56 PM

jennyh said:
Oh dear *another* billion, who cares? Obviously not AMD's backers for sure. :D 

Perhaps they are being secretly bankrolled by IBM...or wait even better - the European Union!


Hmm, is this another "guarantee" from you?? :D  Methinks your guarantees are worth as much as the electrons they are printed on..

Even the UAE has its limits - we should find out when AMD has to go hat-in-hand back to them, probably before the end of the year.
a b à CPUs
July 22, 2009 1:38:59 PM

sonoran said:
And they better hope Larrabee isn't a complete game-changer, because I've heard no news (or even rumors) suggesting that they have anything remotely like it. Interesting times ahead, to be sure...


TBH although I don't put anything past the capabilities of Intel's engineers, the leaked news about Larrabee doesn't seem too promising at the moment. Hopefully it'll turn out competitive but time will tell.
a b à CPUs
July 22, 2009 3:03:01 PM

Larrabee will be a bust. X86 isn't that good a CPU architecture to begin with, stinks at parrallel tasks (thats a no-no for rasterization techniques), and Intel doesn't have the best history with GPU's to begin with. Intel will show off a few games it happens to work with, do a few things to make Crysis look like it could run well on the card, and when people buy it, they'll see it for what it is.

Now, if Larabee was PowerPC based, we might have a different outcome...(I still wonder how X86 became an industry standard...PowerPC is by far the better architecture)
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