AMD Posts $257 Million Net Profit For Q1: Things Are Looking Up - HotHardware
AMD Posts $257 Million Net Profit For Q1: Things Are Looking Up

AMD Posts $257 Million Net Profit For Q1: Things Are Looking Up

It's mid-April, and that means earnings for many of the companies that litter the NASDAQ and Dow Jones Industrial Index. Intel just recently reported stellar Q1 2010 earnings, and now it's AMD's turn. Did they manage to achieve similar success year-over-year?

Amazingly, they did, sort of. Total revenue for the quarter was $1.57b, with net income posted at $257m. The EPS was set at $0.35, with operating income listed at $182m. Other positive figures include a 47% gross-margin, and we're told that all of the first quarter numbers reflect the deconsolidation of Global Foundries. Dirk Meyer, AMD President and CEO, said this about the numbers:


"Strong product offerings and solid operating performance resulted in record first quarter revenue. We continue to strengthen our product offerings. We launched our latest generation of server platforms, expanded our family of DirectX 11-compatible graphics offerings, and commenced shipments of our next-generation notebook platforms to customers."

Over the quarter, Acer, Asus, Dell, HP, Lenovo and Toshiba broadened their AMD-based client offerings with the expanded AMD Athlon II and Phenom II desktop processors and latest AMD Turion mobile processors. Interestingly, the graphics segment dipped 3% sequentially and increased 88% year-over-year, showing just how bad things were at this point last year.

This is some of the most positive news we have seen from the AMD camp in awhile, and we're eagerly hoping it's just the beginning. Intel was forced to provide AMD with a nice cash infusion late last year, and now this. Is AMD about to make a run on Intel? We're hoping it attacks the netbook CPU market; the Atom needs some competition in a bad way, and we've already seen just how great the Neo platform is. We're rooting for you AMD!


Quarterly Summary

  • Gross margin was 47% in the first quarter.
    • Non-GAAP gross margin was 43%, a sequential increase of two percentage points. This excludes a benefit of $69 million, or four percentage points, related to an inventory adjustment resulting from the deconsolidation of GLOBALFOUNDRIES as compared to Q4-09.
  • Cash, cash equivalents and marketable securities balance at the end of the quarter was $1.93 billion, a sequential increase from $1.77 billion for AMD excluding GLOBALFOUNDRIES.
  • Computing Solutions segment revenue decreased 5% sequentially and increased 23% year-over-year. The sequential decrease was driven by lower microprocessor unit shipments, partially offset by an increase in microprocessor average selling price (ASP). The year-over-year increase was driven by an increase in microprocessor unit shipments.
    • Operating income was $146 million, compared with $161 million in Q4-09 and a loss of $34 million in Q1-09.
    • Acer, Asus, Dell, HP, Lenovo and Toshiba broadened their AMD-based client offerings with the expanded AMD Athlon™ II and Phenom™ II desktop processors and latest AMD Turion mobile processors.
    • HP, Dell, Acer Group, Cray and SGI and other leading computer manufacturers announced plans for more than 25 new platforms based on the AMD Opteron™ 6000 Series server platform, featuring the world’s first 8- and 12-core x86 processor for the high-volume 2P and value 4P server market.
  • Graphics segment revenue decreased 3% sequentially and increased 88% year-over-year. The sequential decrease was driven primarily by a seasonal decline in royalties received in connection with the sale of game console systems, largely offset by an increase in graphics processor unit (GPU) revenue. The year-over-year increase was driven primarily by an increase in GPU shipments.
    • Operating income was $47 million, compared with $50 million in Q4-09 and breakeven in Q1-09.
    • GPU shipments increased sequentially, primarily driven by record mobile discrete graphics unit shipments.
    • GPU ASP increased sequentially and decreased year-over-year.
    • AMD expanded the industry-leading ATI Radeon™ HD 5000 family of graphics cards with seven product introductions. AMD is the only company shipping Microsoft DirectX® 11 capable graphics cards with ATI Eyefinity technology spanning the desktop, notebook and workstation markets. New products introduced include:
  • As a result of deconsolidating GLOBALFOUNDRIES, AMD recognized a non-cash, one-time gain of $325 million in Other income (expense), net in AMD’s Consolidated Statement of Operations.
  • AMD entered into an agreement with the Ontario Ministry of Economic Development and Trade to receive up to $56.4 million CAD grant award under Ontario’s Next Generation of Jobs Fund to bolster R&D spend for AMD Fusion™ processors.
  • AMD was named to Corporate Responsibility Officer Magazine’s 2010 list of 100 Best Corporate Citizens and a Top 10 leader on the inaugural Maplecroft Climate Innovation Index.

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BOOM! Yes, it is about time that AMD finally started getting back in the black. Now they just have to stay there for a few more quarters, get healty, and give us a good next gen product. They need to get competative with Intel again.

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It may be looking up...but it's not making record profit numbers Intel is making. As far as I can remember, this is first time I remember them making a profit in the last 2 years...

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Yea, pretty much I agree this is the first time in the last 2 years they have been in the black. Of course, the thing that was keeping them out of it (the fabs) has now been spun off and they can focus on the areas that they make money at.

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I remember the third quarter about last year, we had this economy project where we had to pick as many companies as we can, and buy virtual stocks for them. The project lasted 2 months and I chose AMD as only one of my companies that I bought and sold stocks from. I ended up buying a couple thousand dollars worth of AMD stocks, and after a week my earnings were so negative that I had to start over.

It's good to see AMD finally turning over a really good profit. It's easy to see though, they now have a fine line of GPU cards, and their new six physical core processor should definitely help them. I don't think that they should push current products though, they need something innovative.

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I really thought AMD would do well being that they had such a lead on the GPU front with the 5 series, this should have helped the bottom line. Getting rid of the fabs was the best move they could have made to get back into the game, as running a fab and upgrading it every few years is expensive to say the least. Now AMD can concentrate on products and execution. Hopefully with the settlement the playing field has been leveled and AMD can sell it's products fairly. I think AMD will really benefit when Bulldozer arrives as they have the complete solution as of today with a stout CPU and a killer GPU, when these two merge it should be magic!!!!!!!!

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Actually Bulldozer is a high-end product and will likely run with a dedicated discrete GPU.

I'm actually very surprised that the stock went down, seeing as they exceeded expecatations. Regardless, the hexacore chips are about to drop and AMD will certainly have a good run with those.

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Good to see they're still hanging in there. As I always say: Intel and Nvidia need the competition to keep their motivation up.

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Intel has held onto the market mainly because if the proprietary deals that they have struck with companies like Dell, HP and others. They tend to sell in bulk to cooperate accounts to boost their revenue without any concern for the private market. This is why the private consumer gets so confused. They see a Dell PC with an I7 for close to a thousand. Then when they go to look for just the processor they find that it alone is roughly the same price.

They will probably keep on pushing the lower end chips in the partner distributed PCs, only giving people I7s with the lowest possible speeds. Then hope that the Gear heads will rush out and want to buy the highest end ones for top dollar. What ever happened to a fair product at a fair price. In the economy the way it is today. I don't understand why they cant give everyone a break on the high end six cores, if they are gaining more revenue towards the bulk box solutions. This is roughly the same thing that everyone has been complaining about with the oil companies! Seems like the only thinking in business today is if you can get away with something, then do it.

This is why I am a big supporter of AMD/ATI, because they have had to rely on their product. In the past five years of a downturned market, we have seen the quality of their products go through the roof, and their prices remain reasonable. Yes this might have been due to the fact that they didn't get their fair share of distributor contracts. But I believe that has also forced them to compete globally and locally as a standalone hardware manufacturer. This is also why we are now seeing Intel scramble to get rid of outdated undersold technology like the Atom, which is right on the edge of being phased out since the new stuff is sitting there waiting to be released.

I have owned many Intel products and have a real affinity for them. Just not for their prices. It seems very easy for a corporation to forget those of us who have supported them for so long, by insulting our intelligence and our pocketbooks. These are not like TVs where you buy one and is serves you well for the next five years before the need arises for a new one. If we buy a computer at least respect us enough to let us upgrade at a reasonable price within reasonable time frames. Really how many of us have bought a CPU or motherboards, only to have two months later that price drop in half and the performance become obsolete.

Personally I will keep on supporting AMD/ATI, just because they stay on the cutting edge and their prices are reasonable. When you get their top of the line product for the cheapest Intel tech from last year for the same price, it is a better deal. Plus it seems for now that with products like the FirePro8800 and even the Bulldozers, they wont be obsolete a few months after you buy them. That is why they are getting voted for corporate responsibility awards and Intel is getting sued for antitrust patent disputes :P

Hi, Im Charlie Brown:)

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@ sp12 the stock took a nose dive when the question was posed what do you see as far as an outlook? And Dirk Meyer responded something to the fact that this has been a great quarter but he did not want to speculate to much beyond that, also he alluded AMD could see a slow down going into next quarter. Wall Street does not like that kind of rhetoric. So even though the numbers were good the outlook was not rosy and therefore the stock got punished. I understand it makes no since but welcome to the world of wall street where you are only as good as your future earnings!!!!!!! It is a world of what have you done for me lately.

As far as Bulldozer I think Zambezi will feature the graphics core that is supposed to be good.

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la_guy_10:

@ sp12 the stock took a nose dive when the question was posed what do you see as far as an outlook? And Dirk Meyer responded something to the fact that this has been a great quarter but he did not want to speculate to much beyond that, also he alluded AMD could see a slow down going into next quarter. Wall Street does not like that kind of rhetoric. So even though the numbers were good the outlook was not rosy and therefore the stock got punished. I understand it makes no since but welcome to the world of wall street where you are only as good as your future earnings!!!!!!! It is a world of what have you done for me lately.

As far as Bulldozer I think Zambezi will feature the graphics core that is supposed to be good.

I kinda agree, a mirky outlook spells doom for a company. For a company to be successful, the guy has to know what the outcome will be. Say there's a shortage of something, what's the guys outlook on it? "Well there be a shortage of that particular product but all the other products are selling strong and we have some new products in the pipeline." Wall Street want's a company that knows what it's doing and knows what it's outlook is, that company is likely what investors will invest on and that company is likely to have a high stock price. When a company doesn't know the outcome, then the stock price drops because investors are not willing to take the risk on a company that might not know what'll happen and because Wall Street might not know what'll happen to the company later on. Will they release a hit product?, will they release a flop?, will they do something else entirely?, nobody knows because the outlook is unclear.

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"This is why the private consumer gets so confused. They see a Dell PC with an I7 for close to a thousand. Then when they go to look for just the processor they find that it alone is roughly the same price."

Hits the nail on the head: I too was amazed at some of those prices, at least when they first came out. Now, of course, you can get the processor for what? $600? Maybe even $300 if we're talking about the LGA 1156 platform since the LGA 1366 is still a bit too expensive for anyone other than the enthusiast, because of its triple-channel memory. But still, even with these deals with HP and DELL, Intel must have a huge profit/investment ratio if they can afford to basically "give away" parts at such low prices to those vendors.

To me, it seems it should be the other way around: AMD makes truly great products, and are always careful about taking care of customers with their backwards compatibility, and good price/performance ratio, so why are they not as profitable? Makes no sense in a purely theoretical study of capitalism, where the best product (the one with the most demand) makes the most money. If that's not working, we have a troubling situation, one where a company like Intel can release a new processor family every month (exaggerating, of course), and they still profit from it because of the idiot n00bs that buy new stuff purely for bragging rights.

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Nethersprite:

But still, even with these deals with HP and DELL, Intel must have a huge profit/investment ratio if they can afford to basically "give away" parts at such low prices to those vendors.

To me, it seems it should be the other way around: AMD makes truly great products, and are always careful about taking care of customers with their backwards compatibility, and good price/performance ratio, so why are they not as profitable? Makes no sense in a purely theoretical study of capitalism, where the best product (the one with the most demand) makes the most money. If that's not working, we have a troubling situation, one where a company like Intel can release a new processor family every month (exaggerating, of course), and they still profit from it because of the idiot n00bs that buy new stuff purely for bragging rights.

I'm confused.

Both HP and Dell do not have exclusivity deals with Intel, so I don't think they have any deals regarding pricing. As for AMD not being profitable, I don't know why they're not profitable. It may be due to the fact that Intel has a dominant market position and the fact that Intel has the most powerful processors despite being expensive. While AMD's processors aren't powerful, they are priced appropriately for what they can deliver. I think the reason for Intel being profitable is because of a recognizable image, performance and proprietary features. I'd admit I haven't seen AMD implement hyper-threading into their processors but they have implemented a Turbo-Boost like feature into their processors so they're at least taking one step closer to competing with Intel.

And also, about the idiot n00bs thing, they don't buy it for bragging rights unless the thing is hyped immensely. Some people actually read reviews before they go out to buy a processor, because they don't want to waste their money on something that might not give them the best performance.

 

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TaylorKarras:

And also, about the idiot n00bs thing, they don't buy it for bragging rights unless the thing is hyped immensely. Some people actually read reviews before they go out to buy a processor, because they don't want to waste their money on something that might not give them the best performance.

I have yet to see this in the year I have been selling computers. 95% of people dont even know what they do really.

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