AMD hits its targets thanks to console APU deals
January 22, 2014 // 11:57 a.m.
AMD's quarterly financial results are in, and the company has hit its targets thanks largely to the strong sales of the Xbox One and PS4 consoles for which it supplies the semi-custom accelerated processing units (APUs.)
The two major design wins for AMD have helped the company beat its earnings forecast for the quarter with revenue of $1.59 billion - up 9 per cent compared to the quarter previous and a healthy 38 per cent compared to the same quarter last year. A gross profit margin of 35 per cent - considerably lower than rival Intel's, it must be noted - means a net income for the quarter of $89 million, a considerable improvement over its previous loss-making quarters.
'Strong execution of our strategic transformation plan drove significant revenue growth and improved profitability in the fourth quarter,' claimed Rory Read, AMD president and chief executive, during the company's earnings call. 'The continued ramp of our semi-custom SoCs and leadership graphics products resulted in a 38 per cent revenue increase from the year ago quarter. Our focus in 2014 is to deliver revenue growth and profitability for the full year by leveraging our differentiated IP to drive success in our targeted new markets and core businesses.'
The bumper quarter, sadly, wasn't quite enough to turn around the company's annual financials: for the year just ended, AMD hit revenue of $5.3 billion for a two per cent year-on-year decline - not bad when the traditional PC market is at its lowest point for years - but low margins of 37 per cent combined with a high operation cost led to an overall net loss of $83 million for the year.
The winners and losers for the quarter are unsurprising: the company's Computing Solutions division saw its revenue drop 13 per cent year-on-year thanks to a decrease in chipset and laptop unit shipments, leading to a $7 million loss - a dramatic shift from the $22 million income it made the quarter prior, but still higher than the division's staggering $323 million loss in Q4 2012. The Graphics and Visual Solutions division, which includes the semi-custom APUs found in Microsoft and Sony's latest consoles, saw the opposite: strong sales of both consoles led to a bumper $121 million operating income for the quarter, up from $22 million in Q4 2012.
As for the future, AMD will clearly be hoping that its latest Kaveri APUs will be riding high on the hopefully-recovering PC market. Combined with continuing sales of AMD-powered consoles and plans to launch a family of server-oriented 64-bit ARM processors by the end of the year, AMD is predicting a good year ahead. Investors, however, are less convinced: in pre-market trading, the company's shares dropped a massive 11.51 per cent to $3.69.