bit-tech.net

AMD losses slow, predicts return to profit soon

AMD losses slow, predicts return to profit soon

AMD's losses are slowing, with the company confidently predicting that it will return to profit in the next quarter - just ahead of a $200 million charge from GlobalFoundries.

Chipmaker AMD has released its latest quarterly financial figures, and they show continued losses - but that isn't preventing the company from predicting it will be back to profitability by the end of the financial year.

AMD has had something of a tough time of late. Where once it held the performance crown over rival Intel, the latter company's latest products comfortably beat AMD's in general-purpose computing workloads. AMD's response has been to concentrate harder at the budget end of the market, producing its range of accelerated processing unit (APU) products which offer significantly improved graphics processing capabilities compared to Intel's equivalently-priced alternatives.

Recently, the company has enjoyed a couple of high-profile wins: launching a new semi-custom chip division, the company has won orders from both Microsoft and Sony to include variants of its Jaguar APU product in their respective next-generation consoles the Xbox One and PlayStation 4. These design wins, fans hope, will help AMD become more competitive in the gaming and enthusiast market, as developers may tweak their code for AMD chips first and Intel's second.

These highlights aside, AMD's financial performance has been poor in the last few years. Poor deals with spin-off fabrication facility GlobalFoundries conspired with slowing demand to make the past few quarters a bad time for the company despite one or two good quarterly results - losses being followed by job cuts and more losses.

Its last report, however, did show slowing losses - although this was helped by the one-time sale and leaseback of its Texas headquarters, without which its losses would have been significantly greater.

The company's latest report reveals continued losses, but the needle is at least going in the right direction now: $1.16 billion in revenue translates to a $74 million loss for the second quarter of 2013, compared to a whopping $146 million loss in Q1. This, however, is somewhat overshadowed by the company's performance this time last year when its Q2 2012 report showed a $37 million profit on $1.41 billion in revenue.

The divisional breakdown shows where the company is struggling. Hit by the global slowdown in traditional PC sales, AMD's Computing Solutions division - responsible for CPUs, APUs, chipsets, embedded processors and server products - reported a 20 per cent year-on-year slump, despite growing 12 per cent quarter-on-quarter. This was particularly hit by a decrease in average selling price (ASP) for the company's microprocessor ranges, a direct consequence of targeting the budget end of the market with low-cost CPUs and APUs.

The company's Graphics and Visual Solutions division - graphics processors for the consumer and professional along with semi-custom APUs for consoles and other embedded markets - also saw a decline of 13 per cent year-on-year, and five per cent quarter-on-quarter. An increase in average selling price, however, means that while revenue was lower compared to this time last year, the impact wasn't quite as bad as it would have otherwise been.

Despite its losses, AMD is continuing to position itself as the comeback king, claiming that revenue will increase 22 per cent in the third financial quarter to allow the company to end the financial year on a much-needed profit. It would be just in time, too: the company's revised Wafer Supply Agreement (WSA) with GlobalFoundries will result in a $200 million charge against the company's Q1 2014 earnings, putting a significant dent in its remaining $1.1 billion cash pile on which the company has placed a minimum target of $700 million.

While AMD's profits on its next-generation console deals will likely be at a low margin, they could still prove to be saving of the company: in its own earnings call, Ubisoft reported that pre-orders of both the Xbox One and the PlayStation 4 are sitting at around double those of their current-generation predecessors at the same point in their respective lifecycles. With AMD the only mainstream competition to Intel in the x86 market, the entire technology industry will be crossing its fingers for the company's long-promised comeback.

12 Comments

Discuss in the forums Reply
Corky42 19th July 2013, 11:57 Quote
When will they been seeing a come back from the consoles ?
I mean do they only get paid when consumers buy the consoles, after that, or before ?
konstantine 19th July 2013, 12:32 Quote
Once APUs become more relevant, when GPGPU matures and grants that boost in performance that AMD CPUs so much need, AMD will start profiting again from their CPU division. It's a fight against time.

HUMA, or shared addressing space between the CPU and the GPU is the last step on the hardware side. All that's left is for software and compilers to catch up.

I have a strong feeling that we will start building high-end gaming PCs using AMD's APUs soon. I've seen some physics simulation benchmarks accelerated using GPGPU and the performance advantage over solely using CPUs is overwhelming.

Go AMD!
Ch33sefiend 19th July 2013, 12:41 Quote
The CPU / GPU needs competition so it's lovely to see AMD making a return. Love my Radeon card :P
rollo 19th July 2013, 13:16 Quote
Not looking great really more negative than positive really again. Expected if they are to survive that they would of approached break even. They have been selling assets alot as well which is making the balances better than they would be otherwise.

Still think a Samsung / Apple buy out of there Gpu devision will happen this year.

Console is one lump sum, nvidia actually lost money on there deals last time around so be intresting to see how AMD does on that front.
SchizoFrog 19th July 2013, 13:22 Quote
I love the fact that people are happy and think things are good for AMD when they are only SLOWING their losses. They are still losing money. Granted they have the deals with Sony and Microsoft for their consoles but it has been often documented that they won't see any profits from that venture within what is likely to be the first 5 years.
As for APUs becoming more and more relevant, do you really think Intel will sit on their laurels and do nothing? They have already made massive advancements in catching up with current AMD APUs on the GPU side and that is without the GPU knowledge that AMD gained with the ATi purchase while the CPU is far superior. I am sure that in 5 years time when APUs are more significant in the market that Intel will have focused more in that area (they already are changing and adapting the Atom range for this already) and will be able to compete or maybe even better AMD's offerings.
Don't get me wrong, I am not an Intel 'Blue Boy' but the road is long and hard in front of AMD before they can even start to break even. Let's hope that they can hang in there...
DbD 19th July 2013, 14:12 Quote
Quote:
Originally Posted by konstantine
Once APUs become more relevant, when GPGPU matures and grants that boost in performance that AMD CPUs so much need, AMD will start profiting again from their CPU division. It's a fight against time.

HUMA, or shared addressing space between the CPU and the GPU is the last step on the hardware side. All that's left is for software and compilers to catch up.

I have a strong feeling that we will start building high-end gaming PCs using AMD's APUs soon. I've seen some physics simulation benchmarks accelerated using GPGPU and the performance advantage over solely using CPUs is overwhelming.

Go AMD!

The CPU division did do relatively well last quarter, it's the reason AMD did better then expectations. APU's unfortunately need Intel backing - basically anything for the PC CPU market done just by AMD has 0% chance of success. For custom chips like consoles sure, but for a market completely dominated by a competitor they'll never get any traction.
schmidtbag 19th July 2013, 14:15 Quote
Quote:
Originally Posted by rollo
Still think a Samsung / Apple buy out of there Gpu devision will happen this year.
I don't see that happening. AMD as a company knows their GPU division is the only thing keeping them alive and they'd be left with products (such as their APUs) that would need to be ditched.
Quote:
Console is one lump sum, nvidia actually lost money on there deals last time around so be intresting to see how AMD does on that front.
Lost money, or made less profit than they expected? Knowing nvidia's ego, it wouldn't surprise me if they made it seem worse than it really was. AMD will profit from the new consoles. They likely won't make as much money as they would if they sold their processors in PCs, but they're still going to make money regardless.

Also, since console optimizations will likely seep into AMD based PCs, that ought to help AMD's PC market.
Snips 19th July 2013, 17:26 Quote
Just trying some of the usual PR spin from AMD yet again. If it wasn't for the lease back, it would look the usual bleak same.

Stick a fork in them, they're done!

Hostile takeover territory by the look of things.
fluxtatic 20th July 2013, 07:00 Quote
Quote:
Originally Posted by rollo

Still think a Samsung / Apple buy out of there Gpu devision will happen this year.

Why would Apple want the former ATI? With Swift, Apple demonstrated quite clearly that they can very quietly put engineers on projects that hit the public out of the blue - I don't recall ever seeing Apple had even gotten their hands on an ARM arch license, and this the company where nerds comb over patent applications and FCC filings to glean whatever minutiae they can on what Apple might have coming.

If Apple were inclined to do so, they're likely already well on their way to developing their own GPUs for their ARM processors - I doubt they'd have any focus on Mac, as the market's comparatively small. If what they do for mobile could be easily ported to x86 (assuming they even stick with Intel), then maybe.

If anything, AMD might worry about Apple poaching their engineers - not sure how non-competes would be litigated across state lines (TX vs CA), but you get laughed out of court if you talk non-compete in CA, as I understand it.

Even AMD's retarded monkey board of directors wouldn't be so foolish to sell off the graphics division - if the company goes down in flames, I guarantee graphics will be the hardest-fought part of the asset auction when the corpse gets picked over.
AlienwareAndy 20th July 2013, 13:36 Quote
Quote:
Originally Posted by schmidtbag
I don't see that happening. AMD as a company knows their GPU division is the only thing keeping them alive and they'd be left with products (such as their APUs) that would need to be ditched.

Hmm I thought they did pretty well with their server products also?
ya93sin 21st July 2013, 00:35 Quote
A $74 million loss is bad news, no matter if you think you are a comeback king or not.
SAimNE 29th July 2013, 04:58 Quote
people saying they are still losing should probably look at the market amd is playing in.... pretty much every part of the home pc market is coming in red. considering that and the amount they have spent on researching and developing things like huma a 74mil loss isnt bad. anyway overall view is that amd is in the middle of recovering, and they are making pretty rapid steps towards it.
Log in

You are not logged in, please login with your forum account below. If you don't already have an account please register to start contributing.



Discuss in the forums