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

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  • takeship - Friday, October 16, 2015 - link

    Semi-custom margins are on a defined decline schedule and reduce over time, not stay the same. I can't remember off hand when this was discussed in the past, but rest assured that both Microsoft & Sony will pay AMD less for their chips next year than they did this year, and paid less this year than they did last year. That's one of the drivers for their margins coming down below 30% this year. That's also why it's so necessary (and beneficial to the console makers as well) for AMD to make sure they have a timely die shrink of those parts down to either 20nm or 16nm. More, smaller chips on the same wafer means AMD can offset those ASP declines. It was assumed, though not confirmed, that the 20nm technology charge they wrote off last quarter was related to to the console chips, as the 20nm node was not designed to be either high frequency (CPU) or high power (GPU). Reply
  • takeship - Friday, October 16, 2015 - link

    Those rumors over the summer of a "slim" PS4 and/or XB1 coming for the holidays were based on estimates for 20nm ramp up schedules for the console chips, had the foundries not crapped the bed and given up. So now we all get to wait until 16nm is done and rolling to get the console redesigns. I'm really crossing my fingers for end of year 2016. Reply
  • nunya112 - Thursday, October 15, 2015 - link

    listening to the Q&A
    lisa has confirmed Zen is Q4 2016 (way too late)
    Lisa confirmed they are selling licencing their IP (aka gutting the company)
    the only part of AMD in the black is Enterprise, Embedded and Semi-Custom
    They sold some part of the company . meaning another 1700 ppl will be laid off !
    the rest including Graphics ALL NEGATIVE
    Reply
  • Stuka87 - Thursday, October 15, 2015 - link

    That part of the company is being spun off. The employees will no longer be AMD employees, but they will be employees of the new joint venture company. Reply
  • Jtaylor1986 - Thursday, October 15, 2015 - link

    They aren't laying 1700 people off they are going to be employees of this joint venture. Reply
  • Dobson123 - Thursday, October 15, 2015 - link

    Quote: " Revenue increased 12% over last quarter, although it is still down 46% year-over-year." It's more like 26%, isn't it? Reply
  • Kjella - Thursday, October 15, 2015 - link

    It's referring to the C&G segment mentioned in the previous sentence, but the article is a bit odd placing that paragraph right under a table with the non-GAAP figures for the whole company. Reply
  • JDG1980 - Thursday, October 15, 2015 - link

    This was expected. Virtually the entirety of AMD's current lineup consists of obsolete and/or uncompetitive products. Carrizo might be decent if OEMs ever bothered to use it properly, and Fiji is OK but unbalanced (front-end too narrow) and overpriced. They really need to roll out their FinFET products (Arctic Islands and Zen) as soon as they possibly can. Until then, the slow bleeding will continue. Reply
  • melgross - Thursday, October 15, 2015 - link

    This reminds me of Blackberry. Reply
  • Jtaylor1986 - Thursday, October 15, 2015 - link

    Except BlackBerry has absolutely no problems with it's balance sheet while AMD could potentially run out of cash if things don't go according to plan. So not that much like BlackBerry actually Reply

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