AMD Loses $1.18 Billion in 2012 Amid Major Decline in Revenue

AMD Reports Negative Results for the Fourth Quarter and Whole 2012

by Anton Shilov
01/22/2013 | 11:56 PM

As a result of strategic changes on the market of personal computers as well as due to extremely competitive products available from the arch-rival Intel Corp., sales of Advanced Micro Devices dropped by 17% in 2012 compared to the previous year. The company lost $1.18 billion in 2012 as well as $473 million in the last quarter of the year, which clearly signals that AMD needs changes and competitive products.

 

AMD on Tuesday announced revenue for the fourth quarter of 2012 of $1.16 billion, an operating loss of $422 million, and a net loss of $473 million, or $0.63 per share. Fourth quarter gross margin was positively impacted by the sales of higher priced desktop microprocessors and reached 15%. For the year ended December 29, 2012, AMD reported revenue of $5.42 billion, an operating loss of $1.06 billion and a net loss of $1.18 billion, or $1.60 per share. The whole year gross margin was 23%.

Microprocessor Sales Down

Computing solutions segment (microprocessors, chipsets, etc.) revenue in Q4 2012 was $829 million, down 11% sequentially and 37% year-over-year. The sequential and year-over-year decreases were primarily driven by lower microprocessor unit volume shipments. Operating loss was $323 million, compared with an operating loss of $114 million in Q3 2012 and operating income of $165 million in Q4 2011 primarily because AMD was charged for change of the supply agreement with GlobalFoundries.

Client computing revenue declined 13% sequentially, primarily driven by lower microprocessor unit volume shipments. Desktop APU shipments increased as a percentage of desktop microprocessor shipments as sales of AMD’s second-generation A-series APU, code-named “Trinity” more than doubled in the quarter, compared to Q3 2012. Client microprocessor ASP was flat as richer desktop microprocessor offerings offset lower mobile microprocessor ASP.

Server revenue increased sequentially, driven by a higher mix of fabric AMD SeaMicro compute systems (which are primarily based on Intel Corp.’s Atom and Xeon microprocessors) focused on dense servers.

Chipset revenue declined in line with the client microprocessor business.

Graphics Cards Sales Down

AMD’s graphics solutions business showed mixed results in Q4 2012. Graphics segment revenue was $326 million, down 5% sequentially and 15% year-over-year, mainly due to a decline in GPU unit volume shipments, partially offset by a seasonal increase in game console revenue and record revenue in workstation graphics. Graphics segment operating income was $22 million, up $4 million from the prior quarter primarily due to higher game console revenue.

At the same time, the company managed to increase unit shipments and revenue for its high-end AMD Radeon HD graphics cards in the channel, primarily due to the “Never Settle” promotion, which included free video games bundled with graphics cards in addition to a new driver that enabled higher performance of AMD’s graphics solutions.

“AMD continues to evolve our operating model and diversify our product portfolio with the changing PC environment. Innovation is the core of our long-term growth.  The investments we are making in technology today are focused on leveraging our distinctive IP to drive growth in ultra low power client devices, semi-custom SoCs and dense servers.  We expect to deliver differentiated and groundbreaking APUs to our customers in 2013 and remain focused on transforming our operating model to the business realities of today,” said Rory Read, AMD president and CEO.