Microprocessor Sales Are Up, Graphics Chip Shipments Down at AMD

AMD Posts $74 Million in Quarterly Losses, Vows to Become Profitable Next Year

by Anton Shilov
07/18/2013 | 11:55 PM

Advanced Micro Devices on Thursday reported financial results for the second quarter. The firm’s sales were up quarter-over-quarter, but were down year over year as a result of slight decline in shipments of graphics products and a notable increase in shipments of computing products. The company also lost $74 million during the quarter, but said that in Q3 2013 it will become profitable.

 

"Our focus on restructuring and transforming AMD resulted in improved financial results. Our performance in the second quarter was driven by opportunities in our new high-growth and traditional PC businesses. Looking ahead, we will continue to deliver a strong value proposition to our established customers and also reach new customers as we diversify our business. We expect significant revenue growth and a return to profitability in the third quarter," said Rory Read, president and chief executive of AMD.

AMD’s revenue for Q2 FY2013 was $1.16 billion, up 7% sequentially, but down nearly 18% year over year. AMD’s gross margin was 40%, whereas the net loss totaled $74 billion. Operating expenses were $488 million. AMD’s spending on research and development R&D was $308 million, 27% of net revenue, spending on SG&A was $171 million, 15% of net revenue.

AMD’s computing solutions (CS) segment (which includes microprocessors, accelerated processing units, chipsets, embedded processors and server chips) revenue was $841 million, up 12% sequentially due to significantly higher notebook unit shipments and higher server and desktop unit shipments. Computing solutions operating income was $2 million, an improvement from an operating loss of $39 million in Q1 2013. The Q1 2013 operating loss included the impact of a $20 million benefit from sales of inventory that had been previously reserved in Q3 2012 and Q2 2013 operating income included the impact of a similar $11 million benefit.

AMD’s graphics and visual solutions (GVS) segment (which includes consumer and professional GPUs, revenue from semi-custom products and development and game console royalties) revenue was $320 million, down 5% compared to the prior quarter. Graphics and visual solutions segment operating income was breakeven, down from $16 million in the prior quarter primarily due to lower game console royalties.

For Q3 2013 AMD expects revenue to increase 22% sequentially +/-3% as a result of next-gen game consoles’ ramp up; operating expenses to be approximately $450 million; gross margin to be approximately 36%; Inventory to increase to approximately $800 million largely based on semi-custom product builds.