AMD is "Transforming", Says CEO Rory Reed

On Thursday in a conference call after AMD's second quarter 2013 financial results, company president and CEO Rory Read said that the company has entered phase two of its "restructure, accelerate, and ultimately transform" realignment project. With the restructuring complete, the company will now focus on continuing to accelerate its business in the second half of the year. Profitability is expected to return in the third quarter based on the mid-point of AMD's revenue guidance.

For the second quarter, AMD reported an operating loss of $29 million, a net loss of $74 million, and a loss per share of $0.10. The company also reported a non-GAAP operating loss of $20 million, a net loss of $65 million, and loss per share of $0.09. AMD's revenue was $1.16 billion, an increase of 7 percent sequentially and a decrease of 18 percent year-over-year.

Last quarter was actually rather rough for AMD. The company reported an operating loss of $98 million, a net loss of $146 million and a loss per share of $0.19. The company also reported a non-GAAP operating loss of $46 million, a net loss of $94 million and a loss per share of $0.13. Total revenue for that quarter was $1.09 billion.

"Our focus on restructuring and transforming AMD resulted in improved financial results," Read said. "Our performance in the second quarter was driven by opportunities in our new high-growth and traditional PC businesses. Looking ahead, we will continue to deliver a strong value proposition to our established customers and also reach new customers as we diversify our business. We expect significant revenue growth and a return to profitability in the third quarter."

AMD said that for 3Q 2103, it expects to see revenue to increase 22 percent, plus or minus 3 percent, sequentially. That's likely because the company's APU will be appearing in the Xbox One and PlayStation 4 this fall, and it already has a chip in Nintendo's struggling Wii U. The revenue increase will also stem from additional form factors as the company tries to offset slowing sales in the desktop market, and from cost-cutting measures.

Some of those cost-cutting measures have included selling off a campus in Austin, Texas, and laying off 15 percent of its workforce back in October 2012. The company also severed its relationship with Globalfoundries (which resulted in a penalty), and launched a new custom-chip business for gaming consoles, embedded devices and other non-desktop devices. This chip business is expected to account for 20 percent of revenue by the fourth fiscal quarter.

"They've made a lot of progress," said Nathan Brookwood, principal analyst at Insight 64. "In particular, they are not trying to play a game against Intel, which is 10 times their size. That's a pretty good sign."

Brookwood believes that AMD could ultimately make an impact in tablets which currently relies on Temash, AMD's tablet APU for Windows 8. The company indicated it will also build chips for Android tablets and Chrome OS devices, but doesn't have any interest in smartphones. Consoles, however, will likely be the key in driving AMD's return to profitability in 3Q 2013.