AMD Posts Strong Q4, Punts On Non-Financial Issues
Part of that improvement is due to trimming costs—the company's yearly R&D expense was just $352M compared to $432M in 2009—but a hefty chunk of AMD's net income for the year comes courtesy of a legal settlement. AMD evidently settled a patent dispute with an as-yet-unknown company who paid AMD $283 million in Q4 by way of apology.
What's arguably more important, however, is that AMD would've ended Q4 and all of 2010 with its operating income in the black even if the $283M windfall hadn't dropped in for a visit. This was one of Meyer's promises when he took control of the company and the executives on AMD's conference call acknowledged his contributions to the company's year-end financials.
Sales in AMD's Computing Solutions Group (CPUs, motherboards) were flat compared year-on-year, but the graphics side of the business reported $424M in net revenue up from $390M in Q3 and $421M in 2009. More significantly, the graphics division's operating income rose significantly, from $50M in 2009 to 68M in 2010.
What's Coming In 2011
AMD expects Q1 sales to decline seasonally but only slightly. The company slightly beat analyst estimates when it came in at $1.65B today (analysts expected $1.63). At present, the Street expects AMD's income to decline seven percent in Q1, but the company expects the drop to be around four percent. The company's goal is to maintain the same 45 percent gross margin it enjoyed in Q4, but acknowledged that new product introductions, sharp competition from Intel, and its own launch schedules make it hard to predict the collective impact of the various factors.
AMD didn't reveal any of its launch dates for Llano or Bulldozer, but reiterated that these products are on track while Brazos is shipping well. "AMD enters 2011 with significant momentum, amplified by the successful launch of our first Fusion APUs," said Thomas Seifert, CFO and Interim CEO. "I am confident we can drive profitable growth based on the strength of new products we will bring to market. Our customers recognize that Fusion APUs are at the core of delivering the world's most vivid digital experiences."
AMD's Zacate and Ontario Processors
Seifert attributes the company's Q4 revenue gains to growth in the graphics business thanks to the launch of next-generation Radeon hardware, an increase in console sales, and continuing strong chipset attach rates. AMD shipped a total of 1.3M Brazos platforms in Q4; these sales helped lift the company's gross margin at a time when declining microprocessor ASPs in more traditional areas would've depressed it.
That Other Thing That's Going On
Going in to AMD's conference call we expected the company to offer at least a hint of why it dismissed Dirk Meyer and what qualities it would search for in its new CEO. Seifert, however, notified the conference call that AMD wouldn't be discussing either the reason Meyer was dismissed or providing any information on its search. According to his statements, AMD will not comment on any aspect of this endeavor until the process is concluded.
When a brave soul asked for more details on why Meyer was fired, company executives would say only that Meyer wasn't fired for anything that happened in the past. He then recommended all and sundry consult AMD's statements from last week and is apparently laboring under the misconception that the company had previously said something clarifying or valuable. AMD's stock price rose after its earnings call but the BoD's refusal to explain itself won't do anything to strengthen investor confidence. No matter what happens, it's good to see AMD return to the black—we just hope the company stays that way.