AMD Reports First Quarter Results

[Jimmy 2004]

SUNNYVALE, Calif. -- April 19, 2007 --AMD (NYSE: AMD) today reported financial results for the quarter ended March 31, 2007. AMD reported first quarter 2007 revenue of $1.233 billion, an operating loss of $504 million, and a net loss of $611 million, or $1.11 per share. These results include ATI acquisition-related and integration charges of $113 million, or $0.21 per share, and employee stock-based compensation expense of $28 million, or $0.05 per share. In the fourth quarter of 2006, AMD reported revenue of $1.773 billion and an operating loss of $529 million. In the first quarter of 2006, AMD reported revenue of $1.332 billion and operating income of $259 million.

"After more than three years of successfully executing our customer expansion strategy and significantly growing our unit and revenue base, our first quarter performance is disappointing and unacceptable," said Robert J. Rivet, AMD's chief financial officer. "We are aggressively addressing the issues that led to our significant revenue decline. We are aligning our business model, capital expenditures and cost structure with the goal of accelerating our return to profitability. Lastly, our customer relationships remain solid, reflecting their confidence in our strategic direction, current and new products, and technology roadmaps."

First quarter 2007 gross margin was 31 percent, excluding stock-based compensation expense and acquisition-related charges, compared to 40 percent in the fourth quarter of 2006 and 59 percent in the first quarter of 2006. The decrease from the prior quarter was largely due to significantly lower microprocessor unit shipments, lower microprocessor average selling prices (ASPs), and the inclusion of the former ATI operations, which generally have lower-margin products, for the entire quarter.

Computing Solutions
The Computing Solutions segment includes what the company previously called the Computation Products and Embedded Products segments as well as the chipset business acquired with ATI. First quarter Computing Solutions segment revenue was $918 million, including a full quarter of ATI chipset revenues. The 38 percent sequential decline was primarily due to significantly lower microprocessor unit sales and lower microprocessor ASPs. Year-over-year server and desktop processor unit shipments and revenues declined significantly, while mobile processor unit shipments and revenue increased significantly.

Graphics
First quarter Graphics segment revenue of $197 million increased 19 percent from the fourth quarter of 2006, primarily due to a full quarter of operations.

Consumer Electronics
Consumer Electronics segment revenue, including a full quarter of operations, was down sequentially to $118 million. On a full quarter comparative basis, video processor unit shipments into the digital TV market increased in the seasonally down quarter while handheld processor unit shipments and game console revenue decreased.

Additional Highlights
For the second year in a row, FORTUNE magazine ranked AMD as the most innovative company in the semiconductor industry.

• AMD introduced:
  -Ten new AMD Opteron server processors, expanding its low-power server solutions while also delivering industry-leading performance-per-watt.
  -Three new mobile processors led by the AMD Turion 64 X2 TL-64 processor.
  -Three new desktop processors led by the AMD Athlon 64 X2 dual-core processor 6000+ and two energy-efficient AMD Athlon 64 processors.
  -AMD's global customers expanded their AMD-based commercial solutions:
  -HP introduced its first AMD-based 1P tower server and commercial notebooks powered by AMD Turion 64 X2 processors.
  -Sun introduced its first Network Equipment Building Standard (NEBS) compliant server for the telecom market powered by AMD Opteron processors.
  -Network-attached storage market leader NetApp significantly expanded its family of AMD64 technology-based storage solutions.
• AMD remains a key technology partner for an increasing number of enterprises. Ingersoll-Rand, SAP, ThyssenKrupp and others joined the growing ranks of enterprise customers adopting AMD64 technology.
• AMD delivered the industry's first Microsoft Windows Hardware Quality Lab (WHQL) certified video driver for the Windows VistaTM operating system. WHQL certification is considered an essential metric of reliability by computer manufacturers offering Windows Vista systems.
• AMD introduced the AMD 690 desktop and mobile chipset series featuring the industry-leading ATI Radeon x1250 graphics processor. The desktop chipset launched with a company record number of motherboard partners and design wins while global computer manufacturers including HP and Fujitsu Siemens announced new consumer and commercial mobile systems featuring the AMD M690.
• AMD demonstrated a single-system Accelerated Computing platform that broke the teraflop (1 trillion calculations per second) computing barrier, representing a 10-fold performance increase compared with today's high-performance server platforms. The "Teraflop in a Box" system featured AMD Opteron dual-core processors and two next-generation AMD R600 Stream Processors.
• AMD announced DTX, an open standard specification designed to enable the broad development of small form factor (SFF) PCs. DTX enables smaller, quieter, more energy-efficient SFF computing solutions. More than 15 companies, including ASUS, ECS, Founder, Gigabyte, Hedy, NVIDIA, Shuttle, and Tongfang have announced plans to develop DTX solutions.
• AMD introduced new interoperability testing tools to help speed the adoption of the recently announced Desktop and mobile Architecture for System Hardware (DASH). The tools are immediately available to vendors to help accelerate the development of solutions that meet the new industry standard for commercial client management and security.
• AMD expanded its industry-leading AMD Imageon media processor family by introducing three new processors delivering ultra-fast, high-resolution image processing, DVD-quality video and high-definition audio. AMD also began licensing its multimedia processor cores.
• AMD won the VAR Business Five Star Award for Excellence in Partner Programs for the AMD Solution Provider Program and the AMD Commercial Systems Channel Program.

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.

In the seasonally down second quarter, AMD expects revenue to be flat to slightly up.

AMD Teleconference
AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss first quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at http://www.amd.com. The webcast will be available for 10 days after the conference call.

About AMD
Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative processing solutions in the computing, graphics and consumer electronics markets. AMD is dedicated to driving open innovation, choice and industry growth by delivering superior customer-centric solutions that empower consumers and businesses worldwide. For more information, visit http://www.amd.com.

Cautionary Statement
This release contains forward-looking statements concerning revenue for the second quarter of 2007 and potential actions that the company may take to better align its business model, cost structure and capital expenditures, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects," and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this release are based on current beliefs, assumptions and expectations, speak only as of the date of this release and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation's pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities targeting the company's business will prevent attainment of the company's current plans; the company will require additional funding and may not be able to raise funds on favorable terms or at all; the company's competitors, customers and suppliers may take actions that will negate the anticipated benefits of the company's acquisition of ATI; there will be delays associated with integrating ATI's operations; demand for computers and consumer electronics products and, in turn, demand for the company's products will be lower than currently expected; global business and economic conditions will worsen, resulting in lower than currently expected revenue in the second quarter of 2007 and beyond; there will be unexpected variations in market growth and demand for the company's products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will be unable to transition to advanced manufacturing process technologies in a timely and effective way, consistent with planned capital expenditures; the company will be unable to develop, launch and ramp new products and technologies in the volumes and mix required by the market at mature yields and on a timely basis; that the company will be unable to maintain the level of investment in research and development and capacity that is required to remain competitive; the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or the under-utilization of its microprocessor manufacturing facilities; and unfavorable results of operations of Spansion will adversely impact the company's results of operations. Investors are urged to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the Annual Report on From 10-K for the year ended December 31, 2006.

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[Jimmy 2004]

Intel posted profits of $1.6 billion - AMD is struggling financially compared to them at the moment.

 

[mandelore]

Im a firm believer in AMD, and im sure they will bounce back. All companies go thru sucky times, lets hope they get their finger out and rake in some profit with the upcoming quad fx platforms

 

[Jimmy 2004]

Im a firm believer in AMD, and im sure they will bounce back. All companies go thru sucky times, lets hope they get their finger out and rake in some profit with the upcoming quad fx platforms

Not to forget the R600 range of course, that should provide a nice profit for them.

 

[WarEagleAU]

well the CFO needs to realize that they did buy ATI merge or whatever you call it. Thats $5 billion dollars right there.

 

[yogurt_21]

actually this quite a bit better than i was expecting.

 

[kureng]

not to bad situation, AMD still can generate profits once they released their quad-core and R600 cards....

 

[zekrahminator]

AMD has 2 ace-in-the-holes, the R600 and Barcelona/native quad core. Until they release them, Intel and NVIDIA continue to get all the profits for having the latest-and-greatest stuff. I think that if AMD had released R600 and Barcelona with Intel's Conroe and NVIDIA's G80, the situation would be quite the opposite. We might even be looking at a very bankrupt Intel/NVIDIA .

 

[Deleted member 24505]

i hope amd do bounce back,coz a one sided market is a sh*t one.

at least there holding their heads above the water.

 

[demonbrawn]

We might even be looking at a very bankrupt Intel/NVIDIA

by Zek

Hahaha I don't know about that, BUT you're right it would be a much different story. The Conroes are just higher performing CPUs compared to anything that AMD has out right now. Come on, what did they expect? Honestly, if you have not released "next gen" hardware alongside your competitors, then seeing sorry results shouldn't be considered "unacceptable." That is normal. If you understand the market, you would know that people would gravitate toward the latest gear. Nevermind the $1,000+ price tag for the highest end, people will go for it to one-up their neighbors...