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:
    • The ATI Radeon HD 5870 Eyefinity 6 Edition, the world’s first graphics card capable of enabling up to 12 times HD resolution across six monitors,
    • The ATI FirePro™ V8800, the industry’s most powerful professional graphics card ever created for the professional workstation market,
    • The ATI Mobility Radeon™ HD 5870, the first mobile graphics solution that supports Microsoft DirectX 11 technology.
• 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.