AMD Reports Third Quarter Results and Announces Restructuring

[Cristian_25H]

AMD today announced revenue for the third quarter of 2012 of $1.27 billion, a net loss of $157 million, or $0.21 per share, and an operating loss of $131 million. The company reported a non-GAAP net loss of $150 million, or $0.20 per share, and a non-GAAP operating loss of $124 million. AMD is also announcing a restructuring plan designed to reduce operating expenses and better position the company competitively.

"The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD," said Rory Read, AMD president and CEO. "It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities."





Quarterly Summary

● Gross margin was 31 percent.
- Gross margin decreased sequentially due to an inventory write-down of approximately $100 million primarily consisting of first generation A-Series Accelerated Processor Units (APUs) ("Llano"), weaker-than-expected demand, which contributed to lower average selling prices (ASPs) for the company's microprocessor products and lower utilization of the company's back-end manufacturing facilities.
● Cash, cash equivalents and marketable securities balance, including long-term marketable securities, was $1.48 billion at the end of the quarter. The sequential cash decline was primarily from cash used in operations.
● Computing Solutions segment revenue decreased 11 percent sequentially and 28 percent year-over-year. The sequential decrease was driven primarily by a weaker consumer buying environment impacting sales to Original Equipment Manufacturers (OEMs) as well as lower ASPs across all geographies.
- Operating loss was $114 million, compared with operating income of $82 million in Q2-12 and $149 million in Q3-11.
- Microprocessor ASP decreased sequentially and year-over-year.
- AMD launched the second generation A-series APU for the desktop channel market, offering PC enthusiasts affordable performance, discrete-level graphics, multiple cores and fast processing for outstanding responsiveness.
- AMD Introduced the AMD Z-60 APU tablet processor for upcoming Windows 8 tablets. Supporting full HD 1080p of resolution, the AMD Z-60 APU delivers up to 10 hours of idle battery life, nearly eight hours of Web browsing and six hours of video playback.
- AMD launched the AMD AppZone, a new online showcase where consumers can download and run thousands of popular Android apps on AMD-based tablets, notebooks and all-in-one PCs.
- Qualcomm and Samsung became Founder members of the HSA Foundation, adding their support to AMD's vision of delivering a common hardware standard for heterogeneous computing. Since its formation in June 2012, the HSA Foundation has more than doubled its membership.
- AMD announced new products that firmly cement the company as the leader in fabric computing and micro servers, including the SeaMicro SM15000, which extends the SeaMicro Freedom Fabric beyond the chassis to connect directly to massive disk arrays and which will also be offered with AMD Opteron processors.
● Graphics segment revenue decreased seven percent sequentially and 15 percent year-over-year. Graphics processor unit (GPU) revenue decreased 14 percent sequentially due to lower unit shipments to OEMs partially offset by higher channel sales.
- Operating income was $18 million, compared with $31 million in Q2-12 and $12 million in Q3-11.
- GPU ASP was up sequentially and year-over-year.
- AMD continued to expand its industry-leading graphics solutions:
- AMD launched the next generation of AMD FirePro products based on the company's Graphics Core Next Architecture. Setting new levels of performance-per-dollar, the AMD FirePro W5000, W7000, W8000 and W9000 GPUs are capable of delivering 1.5 times greater performance than other available solutions.
- AMD added to its powerful line-up of professional graphics solutions with the introduction of the AMD FirePro S7000 and S9000 cards for server data center environments. Excelling at compute and virtual desktop infrastructure (VDI), these solutions redefine data center graphics capability while consuming 95 percent less power at idle and dramatically cutting data center operating costs.
- AMD announced a collaboration with CiiNOW to deliver the first cloud gaming solution powered by AMD Radeon graphics to enable the best online gaming experience possible.

Operational Restructuring Designed to Enhance Financial Results, Set New Revenue Breakeven Target

AMD's restructuring plan, a significant portion of which will be implemented in the fourth quarter of 2012, will include a workforce reduction and site consolidations.

AMD expects that the restructuring actions taken in the fourth quarter of 2012 will result in operational savings, primarily in operating expenses, of approximately $20 million in the fourth quarter of 2012 and approximately $190 million in 2013. The savings will be largely driven through a reduction of AMD's global workforce by approximately 15 percent, which is expected to be largely completed in the fourth quarter of 2012. The company currently estimates it will record a restructuring expense in the fourth quarter of 2012 of approximately $80 million in connection with these actions.

AMD is also putting in place a business model to break even at an operating income level of $1.3 billion of quarterly revenue. The company is targeting to achieve this by the end of the third quarter of 2013.

"Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results," said Mr. Read. "Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market."

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 fourth quarter of 2012, AMD expects revenue to decrease 9 percent, plus or minus 4 percent, sequentially.

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

[iO]

That´s really sad. 15% lay-offs is a huge number which will hurt lots of developments.
I bet they gonna even fire some people from the graphics section or other high qualified technical staff, the only people that could save AMD.

[3870x2]

Originally Posted by iO

That´s really sad. 15% lay-offs is a huge number which will hurt lots of developments.
I bet they gonna even fire some people from the graphics section or other high qualified technical staff, the only people that could save AMD.

Lord knows they cant cut their own pay. They also need to fire engineers, not businessmen, and make the remaining engineer work double hours.

On a serious note, there is a point where a company will begin cannibalizing themselves between the important constituents and their families. This could go on for years even, where the pay of these important members usually increases, and bonuses are silently handed out. This prepares them for the eventual shutdown, if it may occur, at the expense of the companies resources, so that they may remain wealthy after the business is gone. Many members will then go on to create a new business with their new wealth.

[Super XP]

Don't worry AMD, I'll support you with my Piledriver FX-8320/50 purchase
Who's with me

[Fluffmeister]

Originally Posted by Super XP

Don't worry AMD, I'll support you with my Piledriver FX-8320/50 purchase
Who's with me

Well that's a potential $199 earned at least!

I suspect they need more though, you better buy in bulk.

[tacosRcool]

Originally Posted by 3870x2

Lord knows they cant cut their own pay. They also need to fire engineers, not businessmen, and make the remaining engineer work double hours.

On a serious note, there is a point where a company will begin cannibalizing themselves between the important constituents and their families. This could go on for years even, where the pay of these important members usually increases, and bonuses are silently handed out. This prepares them for the eventual shutdown, if it may occur, at the expense of the companies resources, so that they may remain wealthy after the business is gone. Many members will then go on to create a new business with their new wealth.

Most engineers already work double hours compared to other professions.

[NC37]

Originally Posted by Super XP

Don't worry AMD, I'll support you with my Piledriver FX-8320/50 purchase
Who's with me

Still debating it here. $200 is very close to 2500K/3570K. Then theres cost of a new board too...wonder if I can get anything for my 990FX.

[Super XP]

Originally Posted by NC37

Still debating it here. $200 is very close to 2500K/3570K. Then theres cost of a new board too...wonder if I can get anything for my 990FX.

You probably can, but why? Your setup is good and these Piledrivers should make it even better. Unless of course you want the best possible PC ever built which will only be obsolete in a matter of months

[suraswami]

Originally Posted by Fluffmeister

Well that's a potential $199 earned at least!

I suspect they need more though, you better buy in bulk.

Then Super_XP can get a bail out amount from the government

Question: Can AMD get bail out money like the GM Bas****s?

15% layoff is sad. Hopefully the company bounces back.

[Kreij]

Originally Posted by suraswami

Question: Can AMD get bail out money like the GM Bas****s?

Hopefully not. We shouldn't be bailing out any companies with taxpayer dollars.

[NC37]

Yeah, Haswell is a big hold up on me for going Intel this late. I know its coming. Had the original Piledriver prices stuck, I dunno if I would have considered them. Would like to throw something better on this 990FX before it gets retired. Got the power to do it this time. Realized finally why my old AM2 board couldn't handle my PII well beyond stock speed. Just didn't have the power. Had a 3+1 power phase on that. Kinda wonder if it was also why I could never get my X2 5000+ BE beyond 2.8Ghz.

[v12dock]

Restructuring what AMD has need for the past 6 years

[suraswami]

Originally Posted by Kreij

Hopefully not. We shouldn't be bailing out any companies with taxpayer dollars.

nah just print more money.

[stinger608]

Wow, this is not good news for AMD!!! They need to have a better developer team to compete with Intel in the processor market.
Hell, back in the Socket A days they were competing and even beating Intel in that market. At the very least they really really need to develop processors that highly compete with Intel.

GPU wise, I thought they were doing a good job competing with Nvidia. Am I wrong with that assumption?

[Kreij]

Originally Posted by stinger608

GPU wise, I thought they were doing a good job competing with Nvidia. Am I wrong with that assumption?

I don't think we will see Nvidia's Q3 results until November 10th, but I have the feeling they are going to do better than AMD. Not only in the GPU department but in their overall core businesses.

AMDs numbers are miserable. I hope they make good decisions or AMD will mean Another Manufacturer Died.

[xenocide]

Originally Posted by Kreij

I don't think we will see Nvidia's Q3 results until November 10th, but I have the feeling they are going to do better than AMD. Not only in the GPU department but in their overall core businesses.

AMDs numbers are miserable. I hope they make good decisions or AMD will mean Another Manufacturer Died.

I think Nvidia did better than people think. I don't know anyone that bought a 7xxx series CPU this year because everyone was trying to get their hands on Kepler. Obviously it's a small sample size, but from what I could see Nvidia GPU's were sold out because of massive demand--not short supply like everyone thought.

[Thefumigator]

Originally Posted by iO

That´s really sad. 15% lay-offs is a huge number which will hurt lots of developments.
I bet they gonna even fire some people from the graphics section or other high qualified technical staff, the only people that could save AMD.

Buyers are the only ones who could save AMD

unluckly you have to market your products better, even if they are bad or good.

[james888]

Originally Posted by xenocide

I think Nvidia did better than people think. I don't know anyone that bought a 7xxx series CPU this year because everyone was trying to get their hands on Kepler. Obviously it's a small sample size, but from what I could see Nvidia GPU's were sold out because of massive demand--not short supply like everyone thought.

I got a 7970. Partially for gpgpu and it generally performed better at a 1440p resolution that I still have yet to upgrade too.

[HumanSmoke]

Originally Posted by james888

I got a 7970. Partially for gpgpu and it generally performed better at a 1440p resolution that I still have yet to upgrade too.

If your likely 2560x1440 is a Korean S-IPS I hope you made sure that the card has dual link DVI output unless you get a panel with the optional DP/HDMI. Some 7950/7970's are single link only.

[ensabrenoir]

Originally Posted by Kreij

Hopefully not. We shouldn't be bailing out any companies with taxpayer dollars.

Do you have any idea the amount of damage would have been done if gm or dodge had gone belly up? This aint wall street were talking about here... thousands of blue collar middle class workers.....you know the back bone of this country. This is one time i think my money was well spent.


Restructuring is what Amd has been doing for the past several years.....

[james888]

Originally Posted by HumanSmoke

If your likely 2560x1440 is a Korean S-IPS I hope you made sure that the card has dual link DVI output unless you get a panel with the optional DP/HDMI. Some 7950/7970's are single link only.

Never checked. Just assumed. It does though.

4096 x 2160 (HDMI)
4096 x 2160 (DisplayPort)
2560 x 1600 (DL-DVI)

[mediasorcerer]

I support them too, always been very happy with the 4 or 5 amd cards i've owned, never had a single issue with any of them.

I seriously hope the arse doesn't drop out of there act.

[Xzibit]

Originally Posted by Kreij

I don't think we will see Nvidia's Q3 results until November 10th, but I have the feeling they are going to do better than AMD. Not only in the GPU department but in their overall core businesses.

AMDs numbers are miserable. I hope they make good decisions or AMD will mean Another Manufacturer Died.

Nvidia is doing better then AMD no doubt about it.

But be warry.

Nvidia
Q4 2011
$116 million in profit

Q1 2012
$60 million in profit

Q2 2012
$119 million in profit

Total: $295 million in profit

Why do this even matter ? Intel is paying $300 million annually to Nvidia for a total of $1.5 billion over 5yrs.
The bright side they can operate at a small loss for the next 5 years.

As far as AMD is concern there is a report that the Canadian GPU department is getting the axe. The bright side if there is one is restructuring will be done by Q4 2012 end so they shall start the year a new.

[HumanSmoke]

Originally Posted by Xzibit

Nvidia is doing better then AMD no doubt about it.But be warry....The bright side they can operate at a small loss for the next 5 years

Things probably aren't that dire:

Furthermore, the company [Nvidia] has over $3.1 billion in cash and short term investments on its balance sheet against virtually no debt.

Originally Posted by Xzibit

As far as AMD is concern there is a report that the Canadian GPU department is getting the axe. The bright side if there is one is restructuring will be done by Q4 2012 end so they shall start the year a new.

That bright side might depend on where the outsourcing of the GPU divisions design/engineering end up if that's the case, and secondly, the 15% employee job losses - sorry, "restructuring actions"- sound like only the first round of cuts:

We continue to evaluate our cost structure and anticipate restructuring actions in the first half of 2013, which will result in additional restructuring charges. However, we are currently unable to quantify these amounts.

Devinder Kumar - Q3 2012 Results-Earning call transcript

[xaira]

you guys are talking like tegra has nothing to do with it, tegra is huge right now, a well placed investment by the green team, on another note...AMD, can you please mate a competitive tech to quicksync and WiDi?????????