Today AMD has announced their third quarter earnings for fiscal year 2015. AMD saw a 13% increase in revenue over Q2 2015, but revenues were down almost 26% over their Q3 2014 numbers. Revenue for the quarter was $1.06 billion USD, down from $1.43 billion a year ago. AMD continues to use GAAP and Non-GAAP earnings to help show the state of the business in greater detail. On a GAAP basis, AMD had an operating loss of $158 million for the quarter, and a $197 million net loss, which works out to $0.25 per share. Compared to last quarter, both losses were larger despite the increased revenue, and the numbers are down significantly over the $17 million net income a year ago.

AMD Q3 2015 Financial Results (GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue $1.06B $942M $1.43B
Gross Margin 23% 25% 35%
Operating Income -$158M -$137M $63M
Net Income -$197M -$181M $17M
Earnings Per Share -$0.25 -$0.23 $0.02

On a Non-GAAP basis, AMD had a $97 million operating loss, which is once again a larger loss than last quarter, and down 211% from the $87 million in operating income last year. Net loss was $136 million, or $0.17 per share, compared to a $41 million net profit and $0.05 per share last year. GAAP to Non-GAAP differences are due to $48 million in restructuring fees and $13 million in stock based compensation.

AMD Q3 2015 Financial Results (Non-GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue $1.06B $942M $1.43B
Gross Margin 23% 28% 35%
Operating Income -$97M -$87M $87M
Net Income -$136M -$131M $41M
Earnings Per Share -$0.17 -$0.17 $0.05

The Computing and Graphics segment continues to struggle, although AMD did see stronger sequential growth here with the recent launch of Carrizo. Revenue increased 12% over last quarter, although it is still down 46% year-over-year. This segment had an operating loss of $181 million for the quarter, up from a loss of $147 million last quarter and a loss of $17 million a year ago. Sequentially, the loss is mostly attributed to a write-down of $65 million which AMD is taking on older-generation products. Annually, the decrease is due to lower overall sales. Unlike Intel, AMD processors had a decrease in Average Selling Price (ASP) both sequentially and year-over-year, so there was no help there from the lower sales volume. The GPU ASP was a different story, staying flat sequentially and increasing year-over-year. Recent launches of new AMD graphics cards have helped here.

AMD Q3 2015 Computing and Graphics
  Q3'2015 Q2'2015 Q3'2014
Revenue $424M $379M $781M
Operating Income -$181M -$147M -$17M

The Enterprise, Embedded, and Semi-Custom segment had a better showing. Revenue increased 13% over last quarter, and was down only 2% year-over-year. Semi-custom sales (read Consoles) drove the sequential increase but lower embedded and server processor sales caused a year-over-year decline. Operating income for this segment came in at $84 million, up from $27 million in Q2 but down from $108 million in Q3 2014. Q2’s numbers were skewed though by a $33 million hit on moving to a new process node.

AMD Q3 2015 Enterprise, Embedded and Semi-Custom
  Q3'2015 Q2'2015 Q3'2014
Revenue $637M $563M $648M
Operating Income $84M $27M $108M

All Other had an operating loss of $61 million for the quarter, up from $17 million loss in Q2 and a $28 million loss in Q3 2014. This is where they stick their “restructuring charges” and they nicely align with the GAAP vs Non-GAAP values.

The bad news doesn’t stop here either. We’ve seen the departure of a couple of key people at AMD, and AMD is also spinning off some of the company. Revenues for Q4 are expected to decrease an additional 10%, plus or minus 3%, compared to today’s numbers. AMD is doing more corporate restructuring in an attempt to reduce expenses further. Perhaps the most troubling aspect of today’s results is their gross margin is only 23%. They really need closer to 35% for profitability and are a long way from that today.

Source: AMD Investor Relations

POST A COMMENT

78 Comments

View All Comments

  • melgross - Thursday, October 15, 2015 - link

    We can wait, and we can wait, and we can wait. No matter how long we Waite, the results will be the same—worse.

    Let's face it, every time we see these numbers, someone says to wait until the next devices come out. But when we do, it's just worse again.
    Reply
  • MapRef41N93W - Thursday, October 15, 2015 - link

    Ah, the good ole' AMD spin force out in full with this post. AMD releases new GPUs and their income drops even more than the previous quarter = good news apparently.

    Best quarter in years??? LOL yeah because Q1 of 2014 wasn't a massively successful quarter for AMD after they cashed in on the mining fiasco or anything. But no, this quarter which had the biggest disaster of a new GPU series launch in the entire history of AMD/ATI is the best quarter in years.
    Reply
  • mdriftmeyer - Friday, October 16, 2015 - link

    You're correct on all counts. The growth over successive quarters is being ignored while talking year over year declines. The bottom was Q2. Q3 has started its come back. Then add the news of the joint venture and the 8-Core ARM57 Engineering samples in the Opteron space spotted today, and Q42015 and Q12016 are going to be when you really want to get in on AMD stock or be kicking yourself. Reply
  • melgross - Friday, October 16, 2015 - link

    I'm surprised at you for believing this. AMD is on a death spiral. Selling 85% of their Chinese holdings is just going to speed this up, while giving the Chinese whatever worthwhile IP they may have there. Reply
  • mdriftmeyer - Friday, October 16, 2015 - link

    The money is in the designs and outsourcing the manufacturing the finished product. It's exactly what Apple does. Reply
  • Michael Bay - Sunday, October 18, 2015 - link

    Except Apple can up and buy AMD and Intel five times over, and Zen is a year away. Reply
  • olderkid - Friday, October 16, 2015 - link

    They lose money on every quarter but they make it up on volume! Reply
  • melgross - Friday, October 16, 2015 - link

    They lose money in every quarter, and the overall volume is dropping as well. Reply
  • KAlmquist - Monday, October 19, 2015 - link

    Below I list the quarterly revenue and earnings for the last few years. The PC business tends to do better in the second half of the year. The revenue numbers for 2013 are an example. That didn't happen in 2014, and while it appears to be happening this year, the effect appears to be small. There is nothing here to suggest that revenues will be up in the first half of 2016.

    2013Q1 1088 -146
    2013Q2 1161 -74
    2013Q3 1461 48
    2013Q4 1589 89
    2014Q1 1397 -20
    2014Q2 1441 -36
    2014Q3 1429 17
    2014Q4 1239 -364
    2015Q1 1030 -180
    2015Q2 942 -181
    2015Q3 1061 -197
    Reply
  • Kjella - Thursday, October 15, 2015 - link

    "Perhaps the most troubling aspect of today’s results is their gross margin is only 23%. They really need closer to 35% for profitability and are a long way from that today."

    And the semi-custom segment is mostly long term contracts where margins don't change much from quarter to quarter, like for consoles I imagine the price is set from launch until end-of-life. And don't forget Q3 is usually the highest volume as manufacturers stock up for Christmas sales, to expect any improvement there for Q4 is folly.
    .
    So in reality it's not the entire company that needs to increase their margin by 12%, more like 40% of the company that needs to raise margins by 25%+. That won't happen without a major product launch not just being competitive with but clearly beating Intel or nVidia. And as Zen is still way out and they're both launching HBM2 cards next year, that seems optimistic to say it lightly.
    Reply

Log in

Don't have an account? Sign up now