AMD president and CEO, Dr. Lisa Su, announced the company’s Q4 results, with revenue for the quarter coming in at $1.24 billion, with a gross margin of 29%. Earnings per share based on GAAP results was a loss of $0.47 per share. Compared to Q3, revenue dropped 13%, and year-over-year the drop was 22%. Operating income dropped $393 million from Q3 (623% decrease) and is well down from the Q4 2013 value of $135 million with a posted operating loss this quarter of $330 million. Net income fell from $17 million last quarter and $89 million last year to a $364 million loss, which is a pretty substantial change.

AMD Q4 2014 Financial Results (GAAP)
  Q4'2014 Q3'2014 Q4'2013
Revenue $1.24B $1.43B $1.59B
Operating Income -$330M $63M $135M
Net Income -$364M $17M $89M
Gross Margin 29% 35% 35%
Earnings Per Share -$0.47 $0.02 $0.12

AMD had three large reasons for the loss this quarter which hit their GAAP numbers pretty hard. First, they had yet another write down of their SeaMicro and ATI acquisitions, which they attribute to a decline in their stock prices. This cost them $233 million this quarter. Second, they have had to perform a write down for their second generation APU products, which they have listed higher on their balance sheets than they can sell them for now, however they do expect to sell through their inventory. This contributed to a $58 million non-cash charge. Finally, restructuring charges based on layoffs and the departure of their CEO, as well as real estate restructuring charges cost an additional $71 million. As these are all one time charges, AMD has also released Non-GAAP results which exclude these write downs.

On a Non-GAAP basis, operating income was $36 million, which is down 45% from last quarter’s $66 million value, and down year-over-year from the $91 million operating income from Q4 2013. Net income equates to $2 million, down from $20 million last quarter and $45 million last year, and Non-GAAP earnings per share is $0.00, which can also be spelled as zero, which missed analyst’s expectations of $0.01 per share. The core business is getting to the break-even point, and AMD has said that they have had six consecutive quarters of Non-GAAP profitability, but even that is on a razor’s edge with this quarter’s numbers.

AMD Q4 2014 Financial Results (Non-GAAP)
  Q4'2014 Q3'2014 Q4'2013
Revenue $1.24B $1.43B $1.59B
Operating Income $36M $66M $91M
Net Income $2M $20M $45M
Gross Margin 34% 35% 35%
Earnings Per Share $0.00 $0.03 $0.06

Full numbers for the year had revenue of $5.51 billion, up from $5.30 billion in 2013, and the GAAP operating loss was $155 million for 2014, down from the $103 million operating income for 2013. GAAP net income for 2014 was down as well, to a $403 million loss, exceeding 2013’s loss of $83 million. Non-GAAP values for 2014 were slightly better, with a $235 million operating income and a small profit of $51 million for the fiscal year. Once again, the core business is breaking even, but the heavy write downs are hurting the bottom line.

Looking at individual business lines, the Computing and Graphics segment had a net revenue for Q4 of $662 million, down 15% from Q3 and down 16% from Q4 2013. Lower desktop processor and GPU sales are the blame over last quarter, and desktop processors and chipset sales are called out as the decrease over last year’s numbers. Operating loss for the segment was $56 million, as compared to $17 million in Q3 and $15 million in Q4 2013. Lower channel sales were partially offset by lower operating expenses. Average selling price actually increased both sequentially and year-over-year for processors and chipsets, but GPU selling price decreased year-over-year. This is a soft spot for AMD, and they are diversifying their business outside of the traditional PC space in an attempt to keep one weak line from hurting the company so much. In 2012, about 90% of AMD’s business was based on the traditional PC industry, and by 2014 it was down to 60%, with the other 40% consisting of professional graphics, semi-custom chips, ARM based server, embedded, and ultra low-power clients. By 2015 they are estimating that 50% of their business will be these new markets.

Looking at the Enterprise, Embedded, and Semi-Custom group at AMD, you can see why they are moving that direction. For the full fiscal year, this group contributed $2.374 billion in revenue, and had an operating income of $399 million, both of these are up from 2013 where they managed only $1.577 billion in revenue and $295 million in operating income from this group. Looking at the quarter itself, revenue fell 16% from Q3’s $648 million to $577 million, which AMD attributed to a large run-up of chips for the Xbox One and PlayStation 4 in Q3, as Microsoft and Sony built up inventory for the holiday season. Operating income for Q4 was $109 million, down from $129 million Q4 2013 and up slightly from the $108 million last quarter.

The “All Other” category had no revenue for the quarter, but took a $383 million operating loss, which results in a 2014 operating loss of $478 million for the year. This is the category that is taking the write downs we have already discussed.

Looking ahead to 2015, AMD is listing 2015 as “profitable” at least as far as Non-GAAP figures. Q1 2015 guidance is for a 15% drop in revenue, plus or minus 3%. Gross margin should be up 5% to 34%.

AMD has seen some pretty serious competition in the PC segment, which is still their largest single contributor. Intel has just released their 14 nm parts, with a new CPU architecture due out later this year with Skylake. AMD does have a new APU on the horizon though with Carrizo, and they had working prototypes at CES. While CPU performance will likely not stun anyone due to the new CPU being still based on the Bulldozer architecture, GPU performance should be very competitive. These will be 15 to 35 watt parts, so as far as TDP they will compete against the just launched Broadwell-U. For lower power, AMD will have the Carrizo-L based on Puma+ CPU cores for the 10-25 watt range. All of this will still be on 28 nm though, which puts AMD at a pretty significant disadvantage for efficiency. The increased GPU power may be enough to sway some customers, since many people find they are not CPU bound anyway. Time will tell, and we look forward to seeing the new chips show up so we can test them out.

Source: AMD Investor Relations

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  • siberus - Wednesday, January 21, 2015 - link

    As as person with relatively current cards from both camps I feel i should chime in after your chime in :0 The software suite has pretty much reached parity. Ive suffered bad drivers from both teams and thankfully all but one of them has been quashed. I actually uninstalled the gfe since it kept hanging while installing driver updates, however this has also been fixed in recent updates. As far as in game performance that's a pendulum that swings back and forth between what people decide to cherry pick. I have no problems recommending either to my friends at this point. Get what you can afford and then stop reading performance charts because nothing fuels an unneeded upgrade like regret lol.
  • JarredWalton - Wednesday, January 21, 2015 - link

    As a person that owns and has tested both top GPUs from both companies, let me chime in and say that the driver situation at AMD is often times untenable. Just the other day, one of my GPUs "disappeared" from my system (hard reboot during the night or maybe a Windows Update needed to restart?), giving me a device error for the second GPU. (These are R9 280 cards, incidentally.) I thought that was weird, so I tried reinstalling the Omega drivers; no luck on getting the second GPU working.

    So next I uninstalled and cleaned out all AMD drivers (DDU), restarted, installed the drivers... and now my AMD control panel says "AMD FirePro Control Center". Ha! The second card was still not recognized. So I powered off, removed the GPUs, installed them again, powered on... and now the GPU was back! But the drivers didn't apparently fully install I guess as I needed to run the Omega installer one last time to get things working.

    So that was about two hours of my time wasted. Maybe the root cause is a slightly flaky GPU, but the fact that I now show "FirePro" is clearly a bug in the driver software somewhere. Or maybe it's not? I should try running some professional OpenGL benchmarks to see if somehow I've unlocked previously hidden OpenGL performance? Hahaha....

    Final note: this is NOT the first time I've had issues with AMD drivers during just the past six months. I don't recall precisely what happened last time, but when I was testing Assassin's Creed Unity, at one point my R9 290X cards had some horrible behavior that basically required a similar sequence of troubleshooting.
  • chizow - Wednesday, January 21, 2015 - link

    @Vayra, agree across the board. We are talking maybe $15-20 difference in many cases with their product positioning based on performance alone, with higher premiums at the top end, but you get more perceived value.

    AMD fans tend to be dismissive of many of these Nvidia features as gimmicks, or stupid, pointless etc. but in reality, you add up enough of these "gimmicks" and it just amounts to a better product.
  • chizow - Wednesday, January 21, 2015 - link

    And I'll be honest, over the years of reading over much of this downplaying nonsense in spaces like this, I do feel AMD fans shoulder a lot of the blame for shaping AMD and its downfall. Instead of demanding better support/features and voicing their concerns, they seemed more interested in downplaying and criticizing what Nvidia was doing, thus empowering AMD and giving them an out in their approach to business.

    But it looks like those days are (thankfully) coming to an end. Let's hope whoever buys AMD's GPU business takes a more entrepreneurial/innovative approach to the graphics market.
  • FlushedBubblyJock - Sunday, February 15, 2015 - link

    I agree, they are like enablers for drunks and abusive spouses. Any and every excuse and lie, and the reviewers were no better. At some point shortly ago the damn of lies finally broke open, and no longer could every site beg borrow steal and lie for AMD 100% of the time, just to root for the underdog and "preserve competition" at "any cost".
    AMD rebranded, then pulled their $590 290 release, violating their "we would never do what evil nVidia does" manifesto of lies their fan base bought duped as daises for a decade.
    Hypocrite rang in the fans head, they finally realized all those years "jerks" like me were desperately trying to wake them up, they were made fools of by AMD.
    So the fan base continued, and does to this day, but the absolute stalin like adherence loyalty cracked, it was no longer an unpardonable sin not to worship AMD.
  • chizow - Wednesday, January 21, 2015 - link

    It's amazing people still delude themselves that it comes down to just "better marketing". Nvidia also has better support and takes a more proactive approach to delivering new innovation and features.

    People are willing to pay a premium for this, and while AMD's hardware has always been competitive, it is obvious an overwhelming majority are willing to pay a premium for the better end-user experience.

    What AMD might have realized, far too late imo, is that 1 major showstopping bug they don't fix or address can mean a customer lost for life, if that customer goes to the other side and experiences a better end-user experience. Or when they are constantly the reactive force in the market, people just aren't willing to wait 6-12 months (effectively half the life of some of these parts) when product life cycles are 18-36 months between half and full generations and they can buy a solution that supports those features, today.
  • FlushedBubblyJock - Sunday, February 15, 2015 - link

    Remember, the entire website here, and the entire industry, screamed "housefires!" just a few years ago with the nVidia 500 series... It was a never ending meme and constant theme, and the AMD fans never stopped crowing about it, power power power power electric costs, over and over and over, yet the GTX580 had top spot for speed by a very long and large margin.

    So AMD has itself to blame, pumping the power PR win down the throats of industry and fan base, making it a standing joke on nVidia ... well nVidia heard the ridicule, and came back with the 600 series doing loads better, and the 700 and now the 900 doing low power usage miracles - while somehow AMD created 95C cores for gaming and hundreds of extra watts sucking down in cpu and gpu.
  • chizow - Wednesday, January 21, 2015 - link

    @eanazag, the difference is, Intel helps spur this kind of growth with their design rebates and subsidies and their own in-house ODM center. And they got criticized for it, but the reason we see cheap Intel tablets and (some) phones is because Intel isn't waiting around and hoping someone makes a design based on their product, they provide the sandbox and resources for partners to create those devices.
  • FlushedBubblyJock - Sunday, February 15, 2015 - link

    LOL - you made me realize that other guy just blamed the motherboard makers and vendors - hahahahhahaha - it's never AMD's fault.
  • betam4x - Tuesday, January 20, 2015 - link

    AMD has really forgotten their roots. I understand their desire to focus on supposed high growth areas, but they really should continue focusing on designing fast x86 cores. Who knows when the opportunity to pull another athlon might come along? It might even be now, with intel focusing on power instead of performance. Also, profit isn't just about growth. You can have increased profits but no growth due to market leadership. Once that happens, your company prospers. Case in point: people replace devices every few years with new ones. Give them a top performing AMD chip at a good price and they'll buy. It doesn't cost much to have a small engineering team working on improving your IPC. This team could even be separate from the APU team. In the race to the bottom AMD is quickly going to discover that ARM will be far to competitive for them to continue in these supposed high growth areas. With x86, AMD has just one competitor, with ARM, they have dozens. p.s. not an AMD fanboy, though i owned an athlon x2, athlon 64, and duron back in the day. These days i run top of the line intel CPUs.

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