AMD Reports 2015 Third Quarter Results

Financial Segment Summary

  • Computing and Graphics segment revenue increased 12 percent sequentially and decreased 46 percent from Q3 2014. The sequential increase was primarily due to higher sales of desktop processors and GPUs and the annual decrease was driven primarily by lower client processor sales.
    • Operating loss was $181 million, compared with an operating loss of $147 million in Q2 2015 and an operating loss of $17 million in Q3 2014. The sequential change was primarily driven by an inventory write-down of older-generation products partially offset by higher revenue. The year-over-year change was primarily driven by lower sales.
    • Client processor average selling price (ASP) decreased sequentially and year-over-year primarily driven by lower notebook processor ASP.
    • GPU ASP was flat sequentially and increased year-over-year. The year-over-year change was due to new GPU product offerings and improved AIB ASP.
  • Enterprise, Embedded and Semi-Custom segment revenue increased 13 percent sequentially, primarily driven by seasonally higher sales of our semi-custom SoCs. The year-over-year decrease of 2 percent was primarily driven by lower embedded product and server processor sales.
    • Operating income was $84 million compared with $27 million in Q2 2015 and $108 million in Q3 2014. The sequential increase was primarily due to the absence of the $33 million charge associated with a technology node transition in Q2 2015 and higher sales. The year-over-year decrease was primarily driven by a portion of the Q3 2015 inventory write-down and product mix.
  • All Other category operating loss was $61 million compared with operating losses of $17 million in Q2 2015 and $28 million in Q3 2014. The sequential and year-over-year increases were due to restructuring charges recorded in Q3 2015.

ATMP Manufacturing Facilities Joint Venture
As a part of AMD's ongoing strategic plan to sharpen its focus on designing high-performance technologies and products that drive profitable growth, AMD today announced the signing of a definitive agreement to create a joint venture with Nantong Fujitsu Microelectronics (NFME) that combines AMD's high-volume ATMP facilities and experienced workforce in Penang, Malaysia and Suzhou, China with NFME's established outsourced semiconductor assembly and test (OSAT) expertise to offer differentiated capabilities and scale to service a broad range of customers. The value of the transaction is $436 million and NFME will take an 85 percent ownership of the joint venture. AMD will receive $371 million in cash and expects net proceeds of approximately $320 million, net of taxes and other charges at close. This transaction is expected to close in the first half of 2016, pending successful completion of regulatory approvals.

Recent Highlights

  • AMD expanded its offerings for the commercial client market with new product announcements and security-focused technology partnerships that address the needs of business users and IT decision makers:
    • For the first time, AMD was the exclusive launch processor partner for HP's newest EliteBook commercial client systems featuring the latest AMD PRO A-Series mobile and desktop processors (formerly codenamed "Carrizo PRO" and "Godavari PRO"). AMD's new commercial processors deliver exceptional performance and dependability to meet the evolving budget and IT needs of businesses today and tomorrow. AMD PRO mobile processors power some of the first-to-market commercial notebook systems running the Microsoft® Windows® 10 operating system and are the industry's first commercial processors designed to be compliant with the Heterogeneous Systems Architecture (HSA) 1.0 specification.
  • AMD demonstrated innovation leadership with the introduction of the AMD Radeon™ R9 Nano, the fastest Mini ITX graphics card2 ever created and the world's smallest enthusiast GPU, featuring High-Bandwidth Memory (HBM) to deliver up to 30 percent more performance3 and up to 30 percent lower power4 than AMD's previous generation graphics cards.
  • AMD announced the AMD A8-7670K APU delivering an excellent experience and value for today's mainstream workloads, eSports online gaming, and Microsoft® Windows® 10.
  • AMD delivered seamless and intuitive support for Windows® 10 and DirectX® 12 across AMD APU and GPU solutions with its new AMD Catalyst™ 15.7 Driver update and continued to out-perform its competitors in DirectX® 12 performance, including in the Ashes of the Singularity and Fable Legends benchmarks.
  • AMD further solidified itself as a leader in the embedded market with new product introductions and design wins:
    • Announced multiple new discrete AMD Embedded Radeon™ graphics options specifically designed to advance the visual and parallel processing capabilities of embedded applications.
    • Bolstered its No. 1 position in the thin client space with the announcement that the new FUJITSU FUTRO S920, S720 and S520 are powered by AMD Embedded G-Series SOCs, which couple high-performance computing and graphics capability in a highly-integrated, low-power design.
  • AMD released a carbon footprint analysis of the 6th Generation AMD A-Series APU, formerly codenamed "Carrizo", showing that using the new processor can result in up to a 50 percent reduction in greenhouse gas emissions compared to AMD's previous generation APU.
  • AMD displayed the versatility of its FirePro™ professional graphics to address a variety of markets:
    • Introduced the world's first server GPU with 32GB of memory for high performance compute (HPC).
    • Announced new professional graphics design wins with the Dell Precision™ 3510, 7510, and 7710 mobile workstations powered by AMD FirePro™ mobile GPUs to address the mobile performance needs of engineers and design pros.
    • Showcased the power of FirePro professional graphics technologies to create stunning visual effects for global film productions such as Baahubali: The Beginning and Golden Drops.
    • Unveiled the world's first hardware-based virtualized GPU solution. With the AMD Multiuser GPU, IT pros can easily configure solutions to allow up to 15 users on a single AMD GPU.
  • AMD formed the Radeon Technologies Group to bring a vertical focus on graphics and immersive computing development. With this strategic alignment, AMD is well-positioned to expand its role as the graphics industry leader, recapturing share across traditional graphics markets, and staking leadership positions in new markets such as virtual and augmented reality.

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 Q4 2015, AMD expects revenue to decrease 10 percent, plus or minus 3 percent, sequentially.

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

AMD Teleconference
AMD will hold a conference call for the financial community at 2:00 p.m. PDT (5:00 p.m. EDT) today to discuss its third quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com. The webcast will be available for 12 months after the conference call.

                                                                            
                                                                            
Reconciliation of GAAP to Non-GAAP Gross Margin                                  
                                                                                                                                                        
                                                                                                  ---------------------------
(Millions  except  percentages)                                            Q3-15        Q2-15        Q3-14    
----------------------------------------------------------------------------
GAAP  Gross  Margin                                                                  $      239    $      232    $      494  
----------------------------------------------------------------------------
GAAP  Gross  Margin  %                                                                        23%            25%            35%
----------------------------------------------------------------------------
    Technology  node  transition  charge                                          -              33                -  
----------------------------------------------------------------------------
    Stock-based  compensation*                                                          -                1                1  
----------------------------------------------------------------------------
Non-GAAP  Gross  Margin                                                          $      239    $      266    $      495  
----------------------------------------------------------------------------
Non-GAAP  Gross  Margin  %                                                                23%            28%            35%
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
Reconciliation  of  GAAP  to  Non-GAAP  Operating  Income  (loss)                                    
                                                                                                                                                        
                                                                                                    --------------------------
(Millions)                                                                                    Q3-15        Q2-15        Q3-14  
----------------------------------------------------------------------------
GAAP  operating  income  (loss)                                              $    (158)  $    (137)  $        63
----------------------------------------------------------------------------
    Technology  node  transition  charge                                            -              33                -
----------------------------------------------------------------------------
    Restructuring  and  other  special  charges,  net                    48                -                -
----------------------------------------------------------------------------
    Amortization  of  acquired  intangible  assets                          -                -                3
----------------------------------------------------------------------------
    Stock-based  compensation*                                                          13              17              21
----------------------------------------------------------------------------
Non-GAAP  operating  income  (loss)                                      $      (97)  $      (87)  $        87
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
Reconciliation  of  GAAP  to  Non-GAAP  Net  Income  (Loss)/Earnings  (Loss)  per        
  Share                                                                                                                                            
                                                                                                                                                        
                                                            ----------------------------------------------
(Millions  except  per  share                                                                                                    
  amounts)                                                      Q3-15                      Q2-15                    Q3-14        
----------------------------------------------------------------------------
GAAP  net  income  (loss)                                                                                                            
  /Earnings  (loss)  per  share        $  (197)  $(0.25)  $  (181)  $(0.23)  $      17  $  0.02
----------------------------------------------------------------------------
    Technology  node  transition                                                                                                
      charge                                                      -              -            33        0.04              -            -
----------------------------------------------------------------------------
    Restructuring  and  other                                                                                                      
      special  charges,  net                        48        0.06              -              -              -            -
----------------------------------------------------------------------------
    Amortization  of  acquired                                                                                                    
      intangible  assets                                -              -              -              -              3            -
----------------------------------------------------------------------------
    Stock-based  compensation*                13        0.02            17        0.02            21      0.03
----------------------------------------------------------------------------
Non-GAAP  net  income  (loss)  /                                                                                                
  earnings  (loss)  per  share          $  (136)  $(0.17)  $  (131)  $(0.17)  $      41  $  0.05
----------------------------------------------------------------------------
                                                                                                                                                        
 

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