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AMD Posts Small Loss, Sharply Increased Sales

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3vi1 replied on Thu, Jul 15 2010 9:24 PM
AMD announced its second-quarter earnings yesterday and the company's results, while not perfect, imply continued strong execution. The company's revenue was up 40 percent year-on-year on strong demand for server and mobile parts. Total revenue was $1.65B, up five percent from the first quarter.

"Robust demand for our latest mobile platforms and solid execution drove record second quarter revenue and a healthy gross margin," said Dirk Meyer, AMD President and CEO. "Our unmatched combination of microprocessor and graphics capabilities resulted in customers launching a record number of new mobile and desktop platforms. We added Sony as a microprocessor customer and continue to see our existing customers expand their AMD-based platform offerings."

AMD still posted a net loss of $43 million, but the loss was the result of continued restructuring between AMD and GlobalFoundries rather than indicative of an ASP drop or reduced volume. AMD's CPU business (Computing Solutions) posted a gain of four percent sequentially and 31 percent year-on-year, driven mostly by mobile CPU and chipset sales. Server volumes were within expectations; AMD expects to realize the full positive financial impact of its new products in Q3.

Note: 
GPU Gymnastics

Llano is, in a very real sense, the glue that holds AMD's CPU and GPU segments together; it bears the responsibility of proving the ATI/AMD merger was a good idea. As far as the GPU side of its business is concerned, AMD's numbers were again positive. The GPU segment reported net revenue of $440 million, up 7.5 percent quarter-on-quarter and 87 percent year on year. AMD has clearly benefited from its near-dominance of the DX11 market since Windows 7 launched; the company continues to talk up its top-to-bottom series of DX11 products.

NVIDIA's Fermi was technically available through most of the second quarter, but only in high-end flavors. Now that the GTX 465 and GTX 460 cards are available, we'd expect AMD to face a harder fight when it comes to maintaining DX11 marketshare. nevertheless, the ATI acquisition is contributing a net positive towards AMD's bottom line, even if it's only a few million dollars.

Llano, important as it is to AMD's bottom line, has since been pushed back a few quarters and replaced with a new Bobcat/GPU Fusion hybrid. More information available shortly.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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News Posted: Thu, Jul 15 2010 9:24 PM
AMD announced its second-quarter earnings yesterday and the company's results, while not perfect, imply continued strong execution. The company's revenue was up 40 percent year-on-year on strong demand for server and mobile parts. Total revenue was $1.65B, up five percent from the first quarter.

"Robust demand for our latest mobile platforms and solid execution drove record second quarter revenue and a healthy gross margin," said Dirk Meyer, AMD President and CEO. "Our unmatched combination of microprocessor and graphics capabilities resulted in customers launching a record number of new mobile and desktop platforms. We added Sony as a microprocessor customer and continue to see our existing customers expand their AMD-based platform offerings."

AMD still posted a net loss of $43 million, but the loss was the result of continued restructuring between AMD and GlobalFoundries rather than indicative of an ASP drop or reduced volume. AMD's CPU business (Computing Solutions) posted a gain of four percent sequentially and 31 percent year-on-year, driven mostly by mobile CPU and chipset sales. Server volumes were within expectations; AMD expects to realize the full positive financial impact of its new products in Q3.

Sunnyvale demo'd the first Llano parts at Computex this year, but is keeping mostly quiet about the APU's launch date. Our sources have quietly told us that Llano is ramping at least as well as Shanghai did. That's very good news for a company still struggling to prove it can execute its roadmap solidly over the long term and it implies Llano will arrive on time within its target thermal and performance envelopes.

GPU Gymnastics

Llano is, in a very real sense, the glue that holds AMD's CPU and GPU segments together; it bears the responsibility of proving the ATI/AMD merger was a good idea. As far as the GPU side of its business is concerned, AMD's numbers were again positive. The GPU segment reported net revenue of $440 million, up 7.5 percent quarter-on-quarter and 87 percent year on year. AMD has clearly benefited from its near-dominance of the DX11 market since Windows 7 launched; the company continues to talk up its top-to-bottom series of DX11 products.

NVIDIA's Fermi was technically available through most of the second quarter, but only in high-end flavors. Now that the GTX 465 and GTX 460 cards are available, we'd expect AMD to face a harder fight when it comes to maintaining DX11 marketshare. nevertheless, the ATI acquisition is contributing a net positive towards AMD's bottom line, even if it's only a few million dollars. The reason Llano is considered critical, for those of you who aren't aware, is because AMD first paid $5.4 billion for ATI, then wrote down half the company's value (essentially admitting it had paid far, far too much). In and of themselves, AMD's Radeon series has a mountain of debt to account for before the acquisition could be deemed a profitable move. Llano, with its hybrid APU approach, could significantly accelerate this process.

The biggest single reason to be positive about AMD's current situation is that the company continues to execute precisely what it says it will. None of the company's competitive situations have changed—Llano won't be a CPU that contends with Intel's high-end products—but if AMD can deliver Bulldozer/Bobcat on time and on-target, Sunnyvale may actually have a product that can once again tussle for the high-end.
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3vi1 replied on Thu, Jul 15 2010 9:25 PM

Uh oh... the bug where "Your reply gets replaced by a copy of the article" is back.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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3vi1 replied on Thu, Jul 15 2010 9:31 PM

My original reply was a respectful disagreement with Joel on the subject of:

>> "None of the company's competitive situations have changed"

I believe that with the FTC involvement, and rulings against Intel on multiple continents, the situation has changed greatly.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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acarzt replied on Thu, Jul 15 2010 10:30 PM

I think he means their strategy has not changed. Which really it hasn't. They haven't even attempted to compete in the high end market in quite some time,

I'd like to see them try tho. I think they could make some competitive products if they put their mind to it.

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gibbersome replied on Thu, Jul 15 2010 11:45 PM

Sure they have, except they focused on GPU solutions. While Joel's right that Nvidia has finally caught in terms of affordable DX11 cards, AMD has already gotten quite a head start on the next generation of GPUs.

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acarzt replied on Fri, Jul 16 2010 12:00 AM

This is true... but looking at the potential of the 460 through over clocking and the fact that fermi was rushed... I have a feeling this refresh of fermi cards will be pretty stellar

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lonewolf replied on Fri, Jul 16 2010 1:48 AM

AMD will be a factor going forward. One Fusion becomes a reality things will change in their favor big time.

Again AMD has the complete solution of a solid CPU business and a solid GPU business, Intel and Nvidia cannot say the same.

Once Global Foundries is completely a separate entity things will look much better as far as the numbers are concerned. Now it's just about execution.

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acarzt replied on Fri, Jul 16 2010 3:08 AM

I don't think that Fusion is going to be the big Ace up their sleeve that you guys are thinking it's going to be.

AMD CPUs hold a small percentage of the market share... and ATI integrated graphics has an even smaller percentage.

Intel Chips and Intel intergrate graphics, by far hold the largest chunk of the Market.

Intel is a very well known name, AMD/ATI is not. Intel already has chips out with graphics on package. So they've already got a lead.

The on chip graphics on these new Fusion chips is not going to be some stellar uber performing chip, and even if it was, the majority of consumers just don't care. It's a nice innovation... but they're not going to pick up the amount of market share you guys think.

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Joel H replied on Fri, Jul 16 2010 10:45 AM

3vi1,

The Intel settlement is now eight months past. The primary public impact it had on AMD was the company's decision to accelerate decoupling itself from GlobalFoundries. We've reported on this in multiple stories--when I say the company's situation hasn't changed, I'm implicitly referencing our own past coverage on these topics.

AMD's roadmap still shows Llano in late 2010, Bullcat (see wut i did thar?) processors in 2011. We've also discussed the company's server chip price slashes at some length, and again, I expect those price strategies to continue.

You say that the Intel settlement represents a great change. In theory, I agree with you. Even if we had proof positive that the new agreement was going to lead to OEMs buying lots more AMD chips, we'd still have to wait for current purchase contracts to run out. I would describe the situation as being potentially different--we're waiting on proof.

Acarzt,

Phenom II (Shanghai) isn't competitive with Core i7 at the upper end. I once wrote an article detailing the performance of an overclocked 4.2GHz Phenom II against a 2.67GHz Core i7 and a 3.2GHz i7. In some cases, the Phenom II just barely beat the 2.67GHz chip.

Adding another two cores has made the X6 Phenoms pretty sexy, but AMD can't just flip a switch and scale six chips up to 3.8GHz baseline speed.

Also, Acarzt, I agree with your general portrayal of the market. I don't expect Fusion to work wonders on AMD's competitive status, but I think it'll generally improve things. That's been the reality at AMD for the past 2-3 years--the company has slowly improved its product series over time, and is closing in on performance parity with Intel. If AMD continues executing in this manner, it will eventually catch up to Intel once again and be active in the high end.

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Schmich replied on Fri, Jul 16 2010 2:12 PM

Sticking with the underdog AMD. Without AMD, Intel would be alone in the market and that would be no good at all. Heck Intel is alone in the top-end CPU market and look at their prices...AMD needs more support.

AMD is pretty much on par in price/performance for the lower-end _and_ that's without taking into account platform recycling. AMD practically saves you from buying new motherboards with each CPU and that saves a huge % of money. Intel changing socket every time is enough from staying away from them.

Lets hope the all new design of Bulldozer will be a chef d'oeuvre and that fusion works as planned. AMD can't fall behind Intel that much more and Intel recently said they were ahead of their schedule.

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acarzt replied on Fri, Jul 16 2010 2:55 PM

Joel,

I think they could catch up... but their is a key peice that intel has going for them that AMD/ATI does not.

Marketing.... I see intel commercials all the time. I have never seen an AMD/ATI Commercial.

I've seen ATI commercials on the web.. but never on TV. They need to get their name out there to consumers and pull in new customers.

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Sell your AMD stock now :P

I was fool enough to buy into their crappy marketing. When it comes to actual bussines practice, intel has them beat hands down!

Thanks to those attitudes much like Apple, they are going to drive people away in droves! The only Fusion they belive in is the Fusion of your wallet to their stocks! SO, buy..buy...buy!!!

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Special thanks to HotHardware.com!
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3vi1 replied on Fri, Jul 16 2010 6:30 PM

Good answer Joel. Thanks!

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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acarzt replied on Sat, Jul 17 2010 5:15 AM

Tom, what marketing? lol I haven't anything come out of them in terms of market... well... very little.

Also... Joel, it think it's awesome that you post up articles for us AND stick around to comment and discuss with us. You don't find that kind of stuff anywhere else. Most sites you go to will carpet bomb articles and them forget about them, move on and pay no attention to what their audience has to say.

So thanks, for being awesome and participating in our shenanigans :-)

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Joel H replied on Sun, Jul 18 2010 7:10 PM

See this article for updated etails on AMD's roadmap:

http://hothardware.com/News/AMD-FlipFlops-Llano-Later-Bobcat-Bounding-Forward/#commentform

And Acarzt, thanks very much. Unfortunately, literally the ONE time I didn't listen to a full conference call, I missed something biggish.

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acarzt replied on Mon, Jul 19 2010 1:07 AM

is this "biggish" news coming out in an article here soon?

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