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AMD Q2 2015 Financials Fall Short

We haven't made a habit, at least in recent times, of writing about the financial performance of the companies whose products we cover. Financial analysis is not our area of expertise, and I suspect that a company's quarterly mishaps and fortunes rarely factor into your buying decisions.

But earnings calls and financial announcements are sometimes meaningful because companies reveal tidbits about future plans and products, reveal where they are on their roadmap, and where there might be unexpected light or darkness. This week's Intel earnings announcements, for example, revealed delays in 10nm manufacturing, and a subsequent second tick to the typical Intel tick tock.

AMD's second quarter earnings announcement yesterday is a different story still. To many, it feels as if there continues to be an undercurrent of concern about the long-term financial well-being of AMD, a susurrous jostle of the leaves, as it were, suggesting that a major hiccup, a product stumble, OEM indecision, or whatever else that can plague a company, will in fact send AMD to its doom. (This is an exaggeration, of course.)

Make no mistake, though, things are not pretty. Lisa Su called Q2 a disappointment, and it follows successive quarters of disappointment. Revenue was down, gross margins were down, operating expenses (GAAP and non-GAAP) were up. Last quarter, the company predicted revenues would be flat or up by as much as 3 percent, and that gross margins would be 32 percent (they were actually 25 percent).

AMD spent considerable time on yesterday's earnings call answering questions about how it has managed its cash and its debt, with company executives pointing to a long runway where its financial maneuvers could continue to withstand performance weakness, and adding that it has many further instruments at its disposal such as accessing capital markets, although AMD CFO Devinder Kumar wouldn't speculate what form that capital might take.

So let's keep it simple and report what AMD reported, and all of you can have some idle water cooler discussion in the comments.

  • AMD revenue was $942 million, down 8 percent from Q1 (which was down almost 17 percent from the previous quarter), and 35 percent year-over-year. AMD attributed the quarterly weakness to downward consumer PC demand, and the yearly decline to client and graphics product line sales decreases.
  • AMD reported an operating loss for the quarter of $137 million, equal to last quarter's operating loss, and a net loss of $181 million compared with a $180 million net loss in Q1.
  • AMD also reported that the computing and graphics part of its business was down 29 percent from last quarter, and 54 percent over the same time period compared to the year prior. The company attributed the quarterly decrease to fewer sales of client notebook processors. The operating loss in this part of the business was $147 million, compared to $75 million in Q1 and just $6 million a year ago.
  • In better news, AMD's enterprise, embedded and semi-custom revenues were up 13 percent over last quarter, mostly because of semi-custom SoC wins. The operating income was positive, at $27 million, but down compared with Q1's $45 million and the comparable quarter last year ($97 million), attributable to a charge taken from a node transition.

There's more to it than that. We've covered AMD's roadmap, unveiled at the recent Financial Analyst Day (here and here), with further commentary from AMD CEO Lisa Su during a recent chat early last month. The company projects a 6 percent increase in revenue for Q3, based partly on the semi-custom projections, a positive outlook for Windows 10 for the second half, and the anticipation that Sony and Microsoft will build console inventory for the holiday season. The company also expects to make good Q4 progress in graphics, thanks to the holiday season.

Fritz Nelson is the Editor-In-Chief of Tom's Hardware. Follow him on Twitter, Facebook and Google+. Follow Tom's Hardware on Twitter, Facebook and Google+.

  • jaber2
    AMD gives excuses when it should concentrate on being number one, so far they are second banana when it comes to all, I just hate to see Intel and others just walking all over AMD, AMD was my first computer I build and sold, it was a 386.
    Reply
  • apazeus
    The interesting thing about AMD is that they compete on two fronts--GPUs and CPUs--with companies that each (for the most part, though not completely) focus on just one of those arenas: Nvidia in the graphics world and Intel in the CPU world. It takes enormous resources to double up like that, especially if a company expects to come out on top of the industry. Basically, they're spread too thin to win.

    I use an AMD processor and and AMD graphics card and I'm happy with them. I like that they offer such cost effective options. The fact is, "bang for the buck/jack-of-all-trades" is their business strategy of choice and they will continue to lose ground until they make a true effort to be the best in the field, an effort that would require some big changes. Until then, people need to change their expectations. If you're looking for someone to challenge Nvidia or Intel, you'll have to look somewhere else.
    Reply
  • Shankovich
    Well, they have until some debts are due in 2019. Keller's leading Zen, and it looks like AMD might have the 14nm line, plus they had dibs on HBM2 modules. I have high hopes, it's just going to be a bumpy road the rest of this year.
    Reply
  • expunged
    Can you even remember the last time AMD had the best video card or processor on the market for high end devices. It was probably back when Matrox was a player... They might have had a good low end card, but for the upper end performance products they have not been the top dog for over 20 years. Now that they are using HBM and have the HBM2 deal going, they should partner up with IBM on the 7nm process, then they would have a good shot. True competition in the market place is good for us end users.
    Reply
  • blazorthon
    Can you even remember the last time AMD had the best video card or processor on the market for high end devices. It was probably back when Matrox was a player... They might have had a good low end card, but for the upper end performance products they have not been the top dog for over 20 years. Now that they are using HBM and have the HBM2 deal going, they should partner up with IBM on the 7nm process, then they would have a good shot. True competition in the market place is good for us end users.

    The last time they had the best graphics card on the market? That would be when the Radeon R9 290X launched and before it, the Radeon 7970 when it launched. Before that, the Radeon 5870 when it launched. For CPUs, it's been a while. I think the last itme they had the best for CPUs was before Core 2 launched when it was netburst against Athlon 64.

    Of course, that depends on what you mean by best... I'm assuming you mean highest performance with a single GPU consumer card or a single consumer CPU.
    Reply
  • goodguy713
    Its obvious people do research now days they don't just randomly go out and buy a processor or a graphics card. It really comes down to bad design choices. Ive been looking waiting for something worth while to upgrade to from my 1090t. sure there are better processors out there. and to be honest ive been eyeballing an intel 6 core just for the simple fact that it is the only real positive performance and power benefit sure the platform costs more but when you have the best processors you get more money.. more demand for your products im holding out for this next cpu release and unless I see meaningful differences. I plan to go intel I love to save money I don't need the best or the bleeding edge. Just something that will last me until my next upgrade cycle witch tends to be every 5 years.
    Reply
  • expunged
    16272786 said:
    im holding out for this next cpu release and unless I see meaningful differences.

    I am in the process of building a new system now going to use a haswell chip, due to skylake not having enough pci lanes. Come on Intel 20 lanes are you kidding..
    Reply
  • expunged
    16272771 said:
    Can you even remember the last time AMD had the best video card or processor on the market for high end devices. It was probably back when Matrox was a player... They might have had a good low end card, but for the upper end performance products they have not been the top dog for over 20 years. Now that they are using HBM and have the HBM2 deal going, they should partner up with IBM on the 7nm process, then they would have a good shot. True competition in the market place is good for us end users.

    The last time they had the best graphics card on the market? That would be when the Radeon R9 290X launched and before it, the Radeon 7970 when it launched. Before that, the Radeon 5870 when it launched. For CPUs, it's been a while. I think the last itme they had the best for CPUs was before Core 2 launched when it was netburst against Athlon 64.

    Of course, that depends on what you mean by best... I'm assuming you mean highest performance with a single GPU consumer card or a single consumer CPU.

    Benchmarks show that the Radeon R9 290X was below the gtx 690 as shown here, while it did win in some categories it fell behind in most of them. Don't get me wrong i am not a fanboy, If AMD was to bring out a card that would out perform it's rivals i would buy it. Currently I am waiting on windows 10 with DX12 so I can see the results of the fury x. then i will make the decision on either the Fury x or 980 ti. As it stands now they are neck and neck.

    http://www.tomshardware.com/reviews/radeon-r9-290x-hawaii-review,3650-10.html
    Reply
  • blazorthon
    16272829 said:
    16272786 said:
    im holding out for this next cpu release and unless I see meaningful differences.

    I am in the process of building a new system now going to use a haswell chip, due to skylake not having enough pci lanes. Come on Intel 20 lanes are you kidding..

    Are you complaining about getting MORE PCIe 3.0 lanes than Haswell, and then saying you're going to stick with Haswell because of it? That's what this looks like.
    Reply
  • blazorthon
    16272882 said:
    16272771 said:
    Can you even remember the last time AMD had the best video card or processor on the market for high end devices. It was probably back when Matrox was a player... They might have had a good low end card, but for the upper end performance products they have not been the top dog for over 20 years. Now that they are using HBM and have the HBM2 deal going, they should partner up with IBM on the 7nm process, then they would have a good shot. True competition in the market place is good for us end users.

    The last time they had the best graphics card on the market? That would be when the Radeon R9 290X launched and before it, the Radeon 7970 when it launched. Before that, the Radeon 5870 when it launched. For CPUs, it's been a while. I think the last itme they had the best for CPUs was before Core 2 launched when it was netburst against Athlon 64.

    Of course, that depends on what you mean by best... I'm assuming you mean highest performance with a single GPU consumer card or a single consumer CPU.

    Benchmarks show that the Radeon R9 290X was below the gtx 690 as shown here, while it did win in some categories it fell behind in most of them. Don't get me wrong i am not a fanboy, If AMD was to bring out a card that would out perform it's rivals i would buy it. Currently I am waiting on windows 10 with DX12 so I can see the results of the fury x. then i will make the decision on either the Fury x or 980 ti. As it stands now they are neck and neck.

    http://www.tomshardware.com/reviews/radeon-r9-290x-hawaii-review,3650-10.html

    I guess you ignored the last sentence of my comment? The GTX 690 is not a single GPU card and against it is the Radeon 7990, granted that did come out afterwards.
    Reply