AMD hit by 35 per cent revenue drop
July 17, 2015 | 11:52
AMD has released its latest quarterly earnings report, and it makes for worrying reading: a 35 per cent year-on-year drop in revenue for a total loss of $181 million.
It's no secret that AMD has been struggling financially, and while it managed to claw its way back into profit following deals with Microsoft and Sony for their respective games consoles it has since slipped back into the red. In its second-quarter 2015 filing, the company admitted that things haven't turned around just yet: $942 million in revenue was a whopping 35 per cent lower than the same period last year, and equated to a massive $181 million net loss for the quarter.
In its statement to investors and press, AMD blamed the bulk of its eight per cent sequential revenue drop on the continuing slump in the traditional PC market hitting its accelerated processing unit (APU) sales to original equipment manufacturers (OEMs,) while the whopping year-on-year shortfall was blamed on both poor APU sales and weaker demand for the company's graphics products. The company's profit margin, too, has taken a beating, dropping seven percentage points to just 25 per cent thanks to an increase in low-margin enterprise, embedded and semi-custom sales compared to the higher-margin client and enthusiast lines.
Digging deeper into AMD's figures, things are looking undeniably grim: its Computing and Graphics segment, the bread-and-butter of the company, saw a revenue drop of 29 per cent sequentially and 54 per cent year-on-year - despite an increase in client and graphics average selling prices. While its enterprise, embedded and semi-custom divisions grew 13 per cent sequentially, thanks to increased demand for its console APUs, even this dropped eight per cent year-on-year.
'Strong sequential revenue growth in our EESC segment and channel business was not enough to offset near-term challenges in our PC processor business due to lower than expected consumer demand that impacted sales to OEMs,' admitted Lisa Su, AMD's president and chief executive, of the results. 'We continue to execute our long-term strategy while we navigate the current market environment. Our focus is on developing leadership computing and graphics products capable of driving profitable share growth across our target markets.'
That long-term strategy, AMD has confirmed, includes the launch of the higher-performance Zen x86 processor family, which it promises will have considerable performance advantages over its existing designs. During the conference call following the earnings report, Su also confirmed that the company has taped-out its first FinFET designs - following rival Intel's lead away from planar transistor layouts into three-dimensional designs. No firm launch date was discussed for these parts, however.
AMD's stock price dropped 4.59 per cent following the publication of the results, hitting its lowest point since November 2012.