AMD Reports 2014 Second Quarter Results

By Nathan Kirsch July 18, 2014

AMD Reports 2014 Second Quarter Results

Transformation Strategy on Track

SUNNYVALE, CA — (Marketwired) — 07/17/14 — AMD (NYSE: AMD)

Q2 2014 Results

Revenue of $1.44 billion, increased 3 percent sequentially and 24 percent year-over-year
Gross margin of 35 percent
Operating income of $63 million and non-GAAP(1) operating income of $67 million
Net loss of $36 million, loss per share of $0.05 and non-GAAP(1) net income of $17 million, earnings per share of $0.02

AMD (NYSE: AMD) today announced revenue for the second quarter of 2014 of $1.44 billion, operating income of $63 million and net loss of $36 million, or $0.05 per share. Non-GAAP operating income was $67 million and non-GAAP net income, which primarily excludes $49 million of loss from debt redemption in the quarter, was $17 million, or $0.02 per share.

“The second quarter capped off a solid first half of the year for AMD with strong revenue growth and improved financial performance,” said Rory Read, AMD president and CEO. “Our transformation strategy is on track and we expect to deliver full year non-GAAP profitability and year-over-year revenue growth. We continue to strengthen our business model and shape AMD into a more agile company offering differentiated solutions for a diverse set of markets.”


GAAP Financial Results

	Q2-14	Q1-14	Q2-13
Revenue	$1.44B	$1.40B	$1.16B
Operating income (loss)	$63M	$49M	$(29)M
Net loss / Loss per share	$(36)M/$(0.05)	$(20)M/$(0.03)	$(74)M/$(0.10)

Non-GAAP Financial Results(1)

	Q2-14	Q1-14	Q2-13
Revenue	$1.44B	$1.40B	$1.16B
Operating income (loss)	$67M	$66M	$(20)M
Net income (loss) / Earnings (loss) per share	$17M/$0.02	$12M/$0.02	$(65)M/$(0.09)

Quarterly Financial Summary

Gross margin was 35 percent in Q2 2014.
- Gross margin was flat sequentially.
Cash, cash equivalents and marketable securities were $948 million at the end of the quarter, significantly higher than the target minimum of $600 million and close to the optimal zone of $1 billion.
Total debt at the end of the quarter was $2.21 billion, an increase from $2.14 billion at the end of Q1 2014.
- During Q2 2014, the company continued re-profiling its near-term debt maturities, issuing $500 million in aggregate principal amount of 7.00% Senior Notes due 2024 and repurchasing all $452 million aggregate principal amount of the company’s outstanding 8.125% Senior Notes due 2017.
Computing Solutions segment revenue increased 1 percent sequentially and decreased 20 percent year-over-year. The year-over-year decline was due to decreased microprocessor unit shipments.
- Operating income was $9 million, an improvement from an operating loss of $3 million in Q1 2014 and operating income of $2 million in Q2 2013. The sequential increase was primarily driven by improved gross margin due to a richer mix of notebook products while the year-over-year increase was primarily driven by lower operating expenses.
- Microprocessor average selling price (ASP) increased sequentially and year-over-year.
Graphics and Visual Solutions segment revenue increased 5 percent sequentially and 141 percent year-over-year driven largely by increased semi-custom SoC shipments. Graphics processor unit (GPU) revenue decreased sequentially and year-over-year, primarily due to a decrease in AIB channel sales, partially offset by increased sales of professional graphics and desktop OEM GPUs.
- Operating income was $82 million compared with $91 million in Q1 2014 and breakeven in Q2 2013. The sequential decline was primarily due to lower GPU revenue, while the year-over-year increase was driven by increased sales of semi-custom SoCs.
- GPU ASP decreased sequentially and year-over-year, primarily driven by lower AIB channel sales.

Recent Highlights

AMD unveiled further details on its ambidextrous computing roadmap, including a 64-bit ARM architecture license and plans to develop custom high-performance ARM and x86 processor cores for 2016. The company’s differentiated x86 and ARM strategy is designed to deliver unmatched computing and graphics performance using a shared, flexible infrastructure to drive new innovations.
AMD appointed Dr. Lisa Su to Chief Operating Officer, responsible for overseeing the company’s previously separate global operations, operating segments and sales organization to drive growth in both traditional PC and adjacent markets.
AMD realigned its organization structure to deliver unmatched customer value in both traditional PC markets and adjacent high-growth markets. Effective July 1, 2014, AMD’s two new reportable segments are as follows:
- Computing and Graphics segment, which will primarily include desktop and notebook processors and chipsets, discrete GPUs and professional graphics;
- Enterprise, Embedded and Semi-Custom segment, which will primarily include server and embedded processors, dense servers, semi-custom SoC products, development services and technology for game consoles.
- AMD’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2014 will reflect this new segment reporting structure.
AMD detailed its plans to accelerate the energy efficiency of its accelerated processing units (APUs) delivering 25x efficiency improvements by 2020 through design optimizations, intelligent power management and Heterogeneous System Architecture advances that are expected to enable AMD to outpace the industry’s historical energy efficiency trend by at least 70 percent.
AMD continued to gain momentum with its embedded products in the second quarter.
- The company introduced the 2nd-generation embedded R-Series APU as well as the AMD embedded G-Series SoC and CPU solutions, which will power HP thin clients and Advantech’s new embedded industrial solution and are ideally suited for ATMs, kiosks and medical equipment applications.
- AMD embedded Radeon graphics were selected by Boeing for its next-generation advanced cockpit display systems.
AMD publicly demonstrated for the first time its 64-bit ARM-based AMD Opteron A-Series processor, codenamed “Seattle,” a significant step forward in expanding the footprint of ultra-efficient 64-bit ARM solutions for cloud computing and the Internet of Things.
AMD expanded its mobile APU offerings in the quarter:
- Acer, Dell, HP and Lenovo have all introduced notebooks powered by AMD’s newest 3rd-generation mainstream mobile APUs, which combine category-leading compute performance(2,3) with unique features and rich user interactions.
- AMD also launched its most advanced mobile APUs for consumer and commercial notebooks. The new 2014 performance mobile APUs include AMD’s first FX-branded enthusiast class APU for notebooks as well as AMD Pro A-Series APUs. HP is offering the AMD PRO A-Series APUs across its Elite 700-Series notebooks, desktops and all-in-ones, with additional OEMs expected to introduce systems later this year.
AMD expanded its 2nd-generation Graphics Core Next-based professional graphics solutions with the introduction of the AMD FirePro W8100 professional graphics card, which delivers 38x more performance(4) than the closest competitive offerings based on double precision testing. Dell, HP and more than 10 workstation system integrators have all announced systems featuring the new card.
AMD’s groundbreaking Mantle API, which creates more immersive experiences that take fuller advantage of modern APUs and GPUs to deliver console-like experiences, will be used by Electronic Arts in the upcoming Battlefield Hardline, Dragon Age: Inquisition and Plants vs. Zombies: Garden Warfare games. More than 40 game titles supporting Mantle are in development with more than 50 developers actively working with the API for future titles.

Current Outlook

AMD’s outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

For the third quarter of 2014, AMD expects revenue to increase 2 percent, plus or minus 3 percent, sequentially.

For additional details regarding AMD’s results and outlook please see the CFO commentary posted at quarterlyearnings.amd.com.

AMD Teleconference

AMD will hold a conference call for the financial community at 2:30 p.m. PT (5:30 p.m. ET) today to discuss its second quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its web site at www.amd.com. The webcast will be available for 12 months after the conference call.

About AMD
AMD (NYSE: AMD) designs and integrates technology that powers millions of intelligent devices, including personal computers, tablets, game consoles and cloud servers that define the new era of surround computing. AMD solutions enable people everywhere to realize the full potential of their favorite devices and applications to push the boundaries of what is possible. For more information, visit www.amd.com.

(1)	In this earnings press release, in addition to GAAP financial results, AMD has provided non-GAAP financial measures including non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this earnings press release. AMD also provided Adjusted EBITDA and non-GAAP free cash flow as supplemental measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this earnings press release. AMD is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because AMD believes it assists investors in comparing AMD’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to the data tables at the end of this earnings press release for additional AMD data.
(2)	Testing conducted by AMD Performance Labs on optimized AMD reference systems. PC manufacturers may vary configuration yielding different results. Basemark CL is used to simulate compute performance; AMD A6-6310 APU scored 21 while the “Haswell U” Pentium part scored 3. AMD “Larne” reference platform system using AMD A6-6310 APU with AMD Radeon R4 Graphics, 2×2048 MBytes of DDR3-1600 RAM, Microsoft Windows 8.1 Single Language, and 13.300.0.0 – 13-Jan-2014 driver. Intel Pentium 3556U @ 1.70GHz with Intel HD Graphics, 2×2048 MBytes of DDR3-1600 RAM, Microsoft Windows 8.1 Single Language, 10.18.10.3412 – 28-Jan-2014 driver. BMN-11
(3)	Testing conducted by AMD Performance Labs on optimized AMD reference systems. PC manufacturers may vary configuration yielding different results. Basemark CL is used to simulate compute performance; A4 Micro-6400T APU scored 13 while the “Bay Trail T” platform scored 4. AMD “Discovery” reference platform system using AMD A4 Micro-6400T APU with Radeon R6 Graphics, 2048 MBytes of DDR3-
(4)	SiSoftware Sandra test details: System Description: AMD FirePro W8100 vs. Nvidia Quadro K5000 – Dell T3610, Intel Xeon E5-1620 v2 @ 3.60 GHz, 8GB DDR3, Seagate HDD 7200RPM, Win7 64-bit SP1, 1920×1080 resolution. AMD Driver 13.352.1009 \| Nvidia Driver 333.11