Wednesday, February 1st 2017

AMD Reports Fourth Quarter and Annual 2016 Financial Results

AMD (NASDAQ: AMD) today announced revenue for the fourth quarter of 2016 of $1.11 billion, operating loss of $3 million and net loss of $51 million, or $0.06 per share. Non-GAAP(1) operating income was $26 million, non-GAAP(1) net loss was $8 million and non-GAAP(1) loss per share was $0.01.

"We met our strategic objectives in 2016, successfully executing our product roadmaps, regaining share in key markets, strengthening our financial foundation, and delivering annual revenue growth," said Dr. Lisa Su, AMD president and CEO. "As we enter 2017, we are well positioned and on-track to deliver our strongest set of high-performance computing and graphics products in more than a decade."
Q4 2016 Results
  • Q4 2016 was a 14-week fiscal quarter compared to 13-week fiscal quarters for Q3 2016 and Q4 2015.
  • Revenue of $1.11 billion was up 15 percent year-over-year, primarily due to higher GPU sales. Revenue was down 15 percent sequentially, primarily driven by seasonally lower sales of semi-custom SoCs.
  • On a GAAP basis, gross margin was 32 percent, up 2 percentage points year-over-year and up 27 percentage points sequentially as Q3 2016 gross margin was negatively impacted by a $340 million charge (WSA charge) related to the sixth amendment of the wafer supply agreement with GLOBALFOUNDRIES. Operating loss was $3 million compared to an operating loss of $49 million a year ago and an operating loss of $293 million in the prior quarter. The year-over-year improvement was primarily due to higher revenue and IP monetization licensing gain while the sequential improvement is primarily due to the absence of the WSA charge offset by lower fourth quarter revenue. Net loss was $51 million compared to a net loss of $102 million a year ago and net loss of $406 million in the prior quarter. Loss per share was $0.06 compared to a loss per share of $0.13 a year ago and loss per share of $0.50 in the prior quarter.
  • On a non-GAAP(1) basis, gross margin was 32 percent, up 2 percentage points year-over-year and up 1 percentage point sequentially primarily due to higher Computing and Graphics segment revenue. Operating income was $26 million compared to an operating loss of $39 million a year ago and operating income of $70 million in the prior quarter. Operating income was lower in the current quarter due to lower revenue. Net loss was $8 million compared to net loss of $79 million a year ago and net income of $27 million in the prior quarter. Loss per share was $0.01 compared to a loss per share of $0.10 a year ago and earnings per share of $0.03 in the prior quarter.
  • Cash and cash equivalents were $1.26 billion at the end of the quarter, up $6 million from the end of the prior quarter.
2016 Annual Results
  • Revenue of $4.27 billion, up 7 percent on an annual basis, increased in both reportable segments.
  • On a GAAP basis, gross margin was 23 percent, down 4 percentage points from the prior year primarily due to the WSA charge. Operating loss was $372 million compared to an operating loss of $481 million in the prior year. Operating loss improvement was due to higher revenue, lower restructuring charges, and an IP monetization licensing gain, offset by the WSA charge. Net loss was $497 million compared to a net loss of $660 million in the prior year. Loss per share was $0.60 compared to a loss per share of $0.84 in 2015.
  • On a non-GAAP(1) basis, gross margin was 31 percent, up 3 percentage points year-over-year primarily due to improved product mix and an inventory write-down recorded in Q3 2015. Operating income was $44 million compared to an operating loss of $253 million in the prior year. Operating income improvement was primarily related to higher revenue and the IP monetization licensing gain. Net loss was $117 million compared to a net loss of $419 million in the prior year. Loss per share was $0.14 compared to a loss per share of $0.54 in 2015.
  • Cash and cash equivalents were $1.26 billion at the end of the year, up from $785 million at the end of the prior year.
Quarterly Financial Segment Summary
  • Computing and Graphics segment revenue was $600 million, up 28 percent year-over-year and 27 percent sequentially. The year-over-year increase was primarily driven by higher GPU sales. The sequential increase was primarily due to higher GPU and client processor sales.
  • Operating loss was $21 million, compared to an operating loss of $99 million in Q4 2015 and an operating loss of $66 million in Q3 2016. The year-over-year and sequential improvements were driven primarily by higher revenue.
  • Client average selling price (ASP) was down year-over-year driven by desktop processors, and down sequentially driven by desktop and mobile processors.
  • GPU ASP increased year-over-year due to higher desktop and professional graphics ASPs. GPU ASP increased sequentially due to higher mobile and professional graphics ASPs.
  • Enterprise, Embedded and Semi-Custom segment revenue was $506 million, up 4 percent year-over-year primarily driven by higher embedded and semi-custom SoC revenue. Sequentially, revenue decreased 39 percent due to seasonally lower sales of semi-custom SoCs.
  • Operating income was $47 million compared to $59 million in Q4 2015 and $136 million in Q3 2016. The year-over-year decrease was primarily driven by higher R&D investments in Q4 2016, partially offset by an IP monetization licensing gain. The sequential decrease was primarily due to seasonally lower sales of semi-custom SoCs.
  • All Other operating loss was $29 million compared with an operating loss of $9 million in Q4 2015 and an operating loss of $363 million in Q3 2016. The year-over-year operating loss increase was primarily related to higher stock-based compensation charges in Q4 2016. The sequential improvement was primarily due to the absence of the WSA charge.
Q4 2016 Highlights
AMD disclosed new details on its upcoming CPU and GPU architectures and offerings:
  • AMD delivered new details on the architecture, go-to-market plans, and performance of upcoming "Zen"-based processors:
  • Revealed Ryzen, the brand that will span "Zen"-based desktop (codenamed "Summit Ridge") and notebook (codenamed "Raven Ridge") products.
  • Introduced AMD SenseMI technology, a set of sensing, adapting, and learning features built into AMD Ryzen processors. AMD SenseMI technology is a key enabler of AMD's landmark generational increase of greater than 40 percent in instructions per clock with its "Zen" core architecture.
  • Delivered a first look at the impressive gaming capabilities of an AMD Ryzen CPU and Vega GPU-based desktop system running Star Wars©: Battlefront - Rogue One in 4K at more than 60 frames per second.
  • Showcased ecosystem readiness and the breadth of partner support for forthcoming Ryzen desktop processors with new AM4 motherboards and 'Dream PCs' from global system integrators (SIs), as well as upcoming third-party AM4 thermal solutions.
  • AMD introduced preliminary details of its forthcoming Vega GPU architecture designed to address the most data- and visually-intensive next-generation workloads. Key architecture advancements include a differentiated memory subsystem, next-generation geometry pipeline, new compute engine, and a new pixel engine. GPU products based on the Vega architecture are expected to ship in the second quarter of 2017.
  • AMD announced a new collaboration with Google, making Radeon GPU technology available to Google Cloud Platform users worldwide starting in 2017 to help accelerate Google Compute Engine and Google Cloud Machine Learning services.
  • To accelerate the machine intelligence era in server computing, AMD unveiled the Radeon Instinct initiative, a new suite of GPU hardware and open-source software offerings designed to dramatically increase performance, efficiency, and ease of implementation of deep learning and high-performance compute (HPC) workloads. Radeon Instinct products are expected to ship in 1H 2017.
  • AMD introduced several new products and technologies in the quarter, including:
  • New 7th Generation AMD PRO Processor-based commercial desktops and notebooks from Lenovo.
  • Radeon Pro WX Series of professional graphics cards based on the Polaris architecture, featuring fourth-generation Graphics Core Next (GCN) technology, and engineered on the 14nm FinFET process.
  • A new family of power-efficient graphics processors, the Radeon Pro 400 Series, first available in the all-new 15-inch Apple MacBook Pro.
  • Radeon FreeSync 2 technology, the next major milestone in delivering smooth gameplay and advanced pixel integrity to gamers, with planned availability to consumers in 1H 2017, adding to the 100+ FreeSync monitors already available today.
  • Radeon Pro Software Enterprise, Radeon Software Crimson ReLive Edition, and updates to the Radeon Open Compute Platform (ROCm) software solutions.
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 Q1 2017, AMD expects revenue to decrease 11 percent sequentially, plus or minus 3 percent. The midpoint of guidance would result in Q1 2017 revenue increasing approximately 18 percent year-over-year.
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13 Comments on AMD Reports Fourth Quarter and Annual 2016 Financial Results

#1
zelnep
looking good so far - almost no loss with almost no competetive/relevant products in market... imagine what would happen where AMD will bring those competetive/relevant products that we be drooling about for over a year (Vega, Zen)
Posted on Reply
#2
RejZoR
Looking good for AMD in Q4. With Zen and Vega, I sure hope they'll be making profit in 2017, all year.
Posted on Reply
#3
HTC
zelnep said:
looking good so far - almost no loss with almost no competetive/relevant products in market... imagine what would happen where AMD will bring those competetive/relevant products that we be drooling about for over a year (Vega, Zen)
Only if they are any good. If they don't meet expectations, depending on the degree, AMD may be finished.
Posted on Reply
#4
xkm1948
Release the RyZen! I need a cheap BWE 10 core! :D
Posted on Reply
#5
bonehead123
Just the act of releasing RyZen & Vega alone will not save them.....

The product MUST have kick-ass REAL WORLD performance, excellent quality, and last but not least, be priced reasonably and well below what you would pay for similar products from the competition :rolleyes:

If they can do the above AND make sure their supply chain is up to the task, they will have a great year. If they don't, you can expect them to start bleeding cash again, and this time there may not be a bandage big enough to stop it......

Flawless eXeCuTiOn is key here :twitch:
Posted on Reply
#6
HTC
Both Vega and Ryzen need to put pressure on nVidia and Intel respectively: for that, they need to be close enough in performance to force the competitor to take steps, be them the realease of faster products or a cut in prices.

In case of Vega, should it fail to @ least match Titan X, it will be a failed product, IMO. In such a case, the only way to prevent a complete and utter fail (in regard to Vega) would be to price it VERY competitively which would not be a good thing for AMD's finances ...

In case of Ryzen, should it have "faildozer" like performance (in comparison to Intel's products, @ the time of it's launch), it will be a complete flop, IMO. Current leaked benchmarks seem to show it will be good but AMD usually chooses to show benchmarks that favor them the most, so there's that ...
Posted on Reply
#7
Xzibit
HTC said:
Both Vega and Ryzen need to put pressure on nVidia and Intel respectively: for that, they need to be close enough in performance to force the competitor to take steps, be them the realease of faster products or a cut in prices.

In case of Vega, should it fail to @ least match Titan X, it will be a failed product, IMO. In such a case, the only way to prevent a complete and utter fail (in regard to Vega) would be to price it VERY competitively which would not be a good thing for AMD's finances ...

In case of Ryzen, should it have "faildozer" like performance (in comparison to Intel's products, @ the time of it's launch), it will be a complete flop, IMO. Current leaked benchmarks seem to show it will be good but AMD usually chooses to show benchmarks that favor them the most, so there's that ...
The leaked benchmarks didn't come from AMD. It came from a Magazine Canard PC Hardware that had early Engineering Sample that didn't have final clocks speeds nor features.



From the AMD Financial CC Q&A

Lisa Su
Yes, so I think for the high-end parts, both Ryzen and Vega, and "Naples", frankly, we should expect that they are well above our corporate average in terms of margin. As it relates to our competitors, I think that's a harder question, but our goal is to make sure that we have very competitive product on a pure performance basis. And so that has been the goal, and that is certainly how we are viewing it. But we will also have some opportunity for price-performance leverage as we gain share in the market. So I think where we are positioning the products is the right place and the right balance between revenue growth and margin. And we will certainly look for every opportunity to improve our margins over time.
It sounds like they are going to price them as high as the market will allow.
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#8
intelzen
stock prices should go up from here unless they have gained like +100% in last year already (witch is possible knowing that how low they fell before)
Posted on Reply
#9
bonehead123
Stock price will be ZERO if they don't release some really great kick ass products at great Intel-killing prices
Posted on Reply
#10
deu
bonehead123 said:
Just the act of releasing RyZen & Vega alone will not save them.....

The product MUST have kick-ass REAL WORLD performance, excellent quality, and last but not least, be priced reasonably and well below what you would pay for similar products from the competition :rolleyes:

If they can do the above AND make sure their supply chain is up to the task, they will have a great year. If they don't, you can expect them to start bleeding cash again, and this time there may not be a bandage big enough to stop it......

Flawless eXeCuTiOn is key here :twitch:
No dude they dont have to do all what you said; they need to have a pricecompetitive product that can make them a profit. That is it. AMD have not been boasting of going for the crown (Intel and NVIDIA will keep those, but when AMD will put out RYZEN cpus at a profit and with a performance INTEL cannot follow (perf/dollars-wise), well they got a product. There are many indicators that this is the case. VEGA will right at launch maybe not take the crowd but the archtechture is ahead of NVIDIAs volta and som tables have been turned in the war. Suddently AMDs archictecture is the one that makes sense and not the other way around.
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#11
drade
Good for AMD. Continue to make me money !!
Posted on Reply
#12
rruff
bonehead123 said:
Just the act of releasing RyZen & Vega alone will not save them.....
The product MUST have kick-ass REAL WORLD performance, excellent quality, and last but not least, be priced reasonably and well below what you would pay for similar products from the competition :rolleyes:
Nah.

AMD already is profitable on GPUs. Polaris initially matched up to Nvidia about like the previous generation did, but better drivers and DX12 and Vulkan are giving them an edge going forward. They also appear to have reduced power consumption a lot lately (RX 480s <100W), and are close to Pascal in that respect. So even if Vega doesn't slay Nvidia, they will still be gaining market share on GPUs.

CPUs are where they have massive upside. They don't need to beat Intel on performance, they just need to be in the ballpark and have efficient processors that they can price competitively. If their processors are efficient there is a huge market in laptops that they are currently missing. That goes for laptop GPUs too BTW.

AMD has become a very small company, and there is a limit to how much they can reasonably do. Baby steps.
Posted on Reply
#13
v12dock
The stock is on fire today... :clap:
Posted on Reply
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