AMD Q3 Results

[Abwx]

Interesting news regarding those two contracts.
http://www.computerworld.com/article/2834884/amd-plans-to-cut-staff-by-7.html

"Brighter days may be in store for AMD. The company won two custom-chip contracts that will bring in revenue of $1 billion over three years starting in 2016. Su did not name the customers, but said AMD's is in a good position to win lucrative contracts to make device-specific chips."

If it's anything like the console contract, a billion over 3 years at $15 a pop is about only an extra 12.5 million a quarter in profit. While the margin might be low, it helps to keep that GF line busy.

Assuming that they are at break even point before this contract 330m/year more will yield 115m net income per year.

 

[desprado]

Judging by how this forum hates and bash AMD so much, this should be a great time for celebration especially for all those Intel fans.

No one hates AMD.Here people only discuss base on fact which falls negative on AMD side.

 

[Vesku]

If there was any truth to what you purport then Rory surely deserves to be fired because what you are claiming is that he has sat idly by without raising a finger to counter-act Intel's anti-competitive practices.

No blogs about it, no comments about it, no lawyer activity regarding it, no FTC or DOJ filings on the matter...zip, nada, nothing.

So either it (anti-competitive practices) doesn't exist, outside the scope of your personal fantasies and narrative, in which case AMD's financials are reflective of Rory's lack of capabilities (which would justify his being fired), or it (anti-competitive practices) does exist in which case AMD is rightly firing Rory who has done nothing to address the situation in any venue whatsoever.

I like to give AMD credit for not being so stupid as to do absolutely nothing in the event that they were/are dealing with illegal anti-competitive tactics, which leads me to conclude that the reason AMD has done nothing is because there actually is nothing to all this FUD you like to spread that Intel is being anti-competitive in the first place.

Imo, the board hoped Read's experience with Lenovo would lead to more design wins at the big OEMs. It seems to me that Intel is willing to lower its ASP on key SKUs that compete directly with AMD ones for OEM designs, rather than use intimidating and directly collusive tactics. AFAIK this isn't illegal as long as Intel is not selling below cost, and even that would only be illegal due to Intel's dominance of the x86 PC and laptop markets. Making public complaints isn't going to help with the OEMs and might actually make it harder.

It's looking more and more to me that Read was tossed out mainly for being too frank and saying the company would continue to be treading water until 2016.


http://www.oregonlive.com/silicon-forest/index.ssf/2014/09/amd_expects_bumps_in_the_road.html

The CEO of the Sunnyvale, California-based company said in an interview today that AMD still has to get through 18 months of old technology before the new chips are available.

"There's going to be bumps," Read said in the interview at Bloomberg LP's headquarters in New York.

If he said that publicly I imagine he was even more frank to the Board of Directors. Perhaps they didn't like having to share a lot of the blame for AMD's poor performance. I remain unimpressed with AMD's BoD.

 

[Phynaz]

Assuming that they are at break even point before this contract 330m/year more will yield 115m net income per year.

In your fantasy scenario where gross margin equals net margin.

 

[desprado]

Imo, the board hoped Read's experience with Lenovo would lead to more design wins at the big OEMs. It seems to me that Intel is willing to lower its ASP on key SKUs that compete directly with AMD ones for OEM designs, rather than use intimidating and directly collusive tactics. AFAIK this isn't illegal as long as Intel is not selling below cost, and even that would only be illegal due to Intel's dominance of the x86 PC and laptop markets. Making public complaints isn't going to help with the OEMs and might actually make it harder.

It's looking more and more to me that Read was tossed out mainly for being too frank and saying the company would continue to be treading water until 2016.


http://www.oregonlive.com/silicon-forest/index.ssf/2014/09/amd_expects_bumps_in_the_road.html



If he said that publicly I imagine he was even more frank to the Board of Directors. Perhaps they didn't like having to share a lot of the blame for AMD's poor performance. I remain unimpressed with AMD's BoD.

he was smart and honest that is why it cost him.

That is one of the main reason why AMD cannot win trust of shareholders.

 

[Haserath]

AMD made money this quarter. That's better than what I was expecting!

I'm now expecting them to become more of an enterprise embedded company than consumer chips considering how quickly they are growing and shrinking.

Hopefully the employees get scooped up by a company in a better position to use them.

 

[Abwx]

In your fantasy scenario where gross margin equals net margin.

You dont seem to understand something to margins, otherwise you would had instantly agreed but i guess that you re not here for sane discussions, neverless i ll explain it to you so you ll learn at least something today.

We know that their gross margin is 35%, this means that the cost of their products, paid to GF mainly, is 65% of their revenues.

Any amount that is over their break even point will indeed require the payment of thoses 65%, the remaining 35% are a net income because the 65% of the amount at break even point are covering all their workforce and other expenses.

If they get 330m/year more they ll have a 65% (of those 330m) cost for the products and 35% (of those 330m) will remain as net income, before taxes of course.

 

[Haserath]

You dont seem to understand something to margins, otherwise you would had instantly agreed but i guess that you re not here for sane discussions, neverless i ll explain it to you so you ll learn at least something today.

We know that their gross margin is 35%, this means that the cost of their products, paid to GF mainly, is 65% of their revenues.

Any amount that is over their break even point will indeed require the payment of thoses 65%, the remaining 35% are a net income because the 65% of the amount at break even point are covering all their workforce and other expenses.

If they get 330m/year more they ll have a 65% (of those 330m) cost for the products and 35% (of those 330m) will remain as net income, before taxes of course.

But how do you know their gross margin for the deal? You're only basing it off of their average gross margin, which is supposed to be higher than these embedded deals.

 

[Abwx]

But how do you know their gross margin for the deal? You're only basing it off of their average gross margin, which is supposed to be higher than these embedded deals.

If they sell at below 35% GM they ll just create losses, dont expect them to enter markets with lower margins than this number, the semi customs chips for MS and Sony are sold with lower margins only apparently, one has to take into account that they were paid for a part of the RD by thoses firms.

 

[raghu78]

Funnily AMD was GAAP profitable for Q3 2014 which is the first in a long long time. The last few quarters they were only profitable in Non GAAP results and had losses in GAAP results. The big hurt came in Q4 projections which were down 13% (around USD 1.25 billion). Embedded,enterprise and Semi custom will be down as console APU shipments go down but so will Computing and Graphics. thats a huge problem for an already bleeding Computing and Graphics division.

 

[know of fence]

Honestly those numbers say nothing, isn't operating knee-deep in debt and showing profits around the 0 mark expressed goal for many companies.
Now they also lumped together Graphics and Computing, so there is nothing to discern here.

However we all know their consumer products: effectively 5 year behind APUs and RADEON roomheaters that are hard to recommend. Who thought releasing GCN updates piecemeal with 1.1 and 1.2 was a good idea?
Im probably contradicting myself saying this but I think the AMD stock is a better value proposition, than any of their products. The situation never has been as dire as it is now. That 28nm stretch is going to be a particularly challenging one. But maybe the current dire straits are completely priced in now and there is a shiny new x86 arch looming, new APUs that can finally fully match consoles, leverage HSA and receive a large boost from DDR4 or stacked RAM and GCN 2.0.
Adaptive Sync is finally released and becomes the industry norm...

 

[mrmt]

Funnily AMD was GAAP profitable for Q3 2014 which is the first in a long long time.

Because of a non-recurring item, the synopsys deal.

 

[ShintaiDK]

At this point, I wonder if AMD would just be better off exiting their x86 business and just license the 64 bit ext to Intel and just focus on graphics and the embedded side which seems to be doing extremely well. Intel is in a really good position to make this happen too. In exchange for paying AMD a 64 bit license on the condition that they exit the x86 field, they are guarantee a monopoly without having to face any legal hurdles. As consumers though, we be the losers on such a deal.

Graphics isnt doing so well anymore. And AMD still needs x86 for the embedded/semi-custom.

However AMDs future is in the embedded/semi-custom segments. And not the more traditional dGPU/CPU/APU segment we have known them for. They cant afford to be leading edge due to low volume and low R&D.

 

[jpiniero]

Graphics isnt doing so well anymore. And AMD still needs x86 for the embedded/semi-custom.

Not necessarily. The two new deals they talked about aren't coming until 2016; so it's pretty obvious they are using either Zen or K12. Given AMD's financial position, K12 would certainly be safer.

 

[ShintaiDK]

Not necessarily. The two new deals they talked about aren't coming until 2016; so it's pretty obvious they are using either Zen or K12. Given AMD's financial position, K12 would certainly be safer.

Oh I agree. It was just the part of directly exit of x86.

Zen is nothing more than another R&D waste it seems. Unless its more or less just a copy of existing cores unto the same platform to share the platform cost and development.

 

[positivedoppler]

Graphics isnt doing so well anymore. And AMD still needs x86 for the embedded/semi-custom.

However AMDs future is in the embedded/semi-custom segments. And not the more traditional dGPU/CPU/APU segment we have known them for. They cant afford to be leading edge due to low volume and low R&D.

Graphics is still doing plenty good. This is just part of the natural Nvidia vs AMD release cycle. Right now Nvidia is on the up cycle with Maxwell. In the past when AMD trumped Nvidia, Nvidia had notebooks and professional graphics to fall back on. I think it's safe to assume this part of the business will recover.

As for x86, most people except for the die hard Intel supporter or AMD haters would love for AMD to exit out of PC and financially I think this is a good time for AMD to do so. For the past year it's been dragging them down or they barely make a profit. The x86 and 64bit x86 cross license is due in November. I've heard not even a whisper of a possible AMD lawsuit against Intel's contra program even though AMD's Mullin is targeted towards tablets. I would be shocked if AMD and Intel haven't been negotiating for some time now. A contract that grants AMD a steady stream of x86 licensing revenue from Intel(drop in the bucket for them) would work out very well financially in the long run for both companies. Intel already does that now with Nvidia and that's probably a frivolous payment Intel is dealing with just go get them to shutup.

 

[Abwx]

As for x86, most people except for the die hard Intel supporter or AMD haters would love for AMD to exit out of PC and financially I think this is a good time for AMD to do so. For the past year it's been dragging them down or they barely make a profit.

That would be suicidal, moreover given all the investments made to update their current line, overall AMD CPUs enginering team is competent, it s just that the executives, including Dirk Meyer as CTO, made the mistake to think that by 2011 everything would be extremely multithreaded and following this lack of insight they did put the bar too low in matter of individual cores IPC, yet it was logical from the start that AMD needed a higher IPC CPU than Intel s since the latter, as proved during the P4 era and Core 2, had systematicaly the process node advantage that allowed to compensate IPC by higher frequency, which AMD did try to counter with a high frequency design but with said neglected single core IPC they had no chance to get their bid successfull if ever they were to be both node and IPC disadvantaged.

The x86 and 64bit x86 cross license is due in November. I've heard not even a whisper of a possible AMD lawsuit against Intel's contra program even though AMD's Mullin is targeted towards tablets. I would be shocked if AMD and Intel haven't been negotiating for some time now. A contract that grants AMD a steady stream of x86 licensing revenue from Intel(drop in the bucket for them) would work out very well financially in the long run for both companies.

Seems that Intel s executive are quite cynicals if we look at the timing of thoses contra revenues, how could AMD sue Intel and at the same time be in good position to renegociate the new cross licencing agreements.?.

 

[positivedoppler]

Interesting. According to the earning call, APU shipment actually increased a bit from last quarter. The entire drag on their business has been used bitcoin cards and Maxwell heading into the 4th quarter. Game console shipments will be down in the 4th quarter after the holiday season which I think is the main reason for the -13% revenue decline.

So it looks like I was wrong, from a APU standpint, they actually had a pretty successful quarter.

 

[desprado]

The pic tell the whole story which on sorry side for AMD.



What AMD need is man power,Talent,Research and huge budget which right AMD right know lack in all terms.

 

[ShintaiDK]

Graphics is still doing plenty good. This is just part of the natural Nvidia vs AMD release cycle. Right now Nvidia is on the up cycle with Maxwell. In the past when AMD trumped Nvidia, Nvidia had notebooks and professional graphics to fall back on. I think it's safe to assume this part of the business will recover.

Maxwell was released at the end of the Q. AMD already lost before that happend.

 

[positivedoppler]

Maxwell was released at the end of the Q. AMD already lost before that happend.

They made it pretty care during last quarter's conference call that they experience inventory problems due to the bitcoin video cards hitting the used market. I believe the poor guidance for Quarter 4 is a combo of Maxwell and the game consoles cooling down after the holidays.

 

[DrMrLordX]

Interesting. According to the earning call, APU shipment actually increased a bit from last quarter. The entire drag on their business has been used bitcoin cards and Maxwell heading into the 4th quarter. Game console shipments will be down in the 4th quarter after the holiday season which I think is the main reason for the -13% revenue decline.

So it looks like I was wrong, from a APU standpint, they actually had a pretty successful quarter.

Hmm. Amazing how disruptive was that Bitcoin business. It's a shame too, since dGPUs are arguably AMD's best product right now.

 

[Vesku]

“I am pleased to announce that we have secured to new wins, accomplishing our goal to close one to two semi-custom wins this year. These new semi-custom SoC’s are expected to deliver combined total lifetime revenue of approximately $1 billion over three years. Design work for these opportunities has started and we anticipate first silicon revenue in 2016.” She goes on to mention that they are diversifying beyond gaming.

http://stockticktock.com/finance-news/amd-secures-two-new-semi-custom-wins-nyseamd/12759/

2016 just like Read said.

 

[Abwx]

http://stockticktock.com/finance-news/amd-secures-two-new-semi-custom-wins-nyseamd/12759/

2016 just like Read said.

Interesting.

The most interesting part about one of these wins is that it is in the ARM server space of which AMD has been pushing heavily.

 

[mrmt]

http://stockticktock.com/finance-news/amd-secures-two-new-semi-custom-wins-nyseamd/12759/

2016 just like Read said.

This is the new VIA being born today. Now they are using Q&A time to announce 40MM per quarter deals.