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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  • chizow - Thursday, January 22, 2015 - link

    Yeah again, who isn't a fan of great product? Oh right, AMD fanboys.
  • chizow - Thursday, January 22, 2015 - link

    lol and did you really cite HSA? Wow that is some oldskool AMD fanboy playbook right there. Yeah, just wait for this...wait for that...wait for underwhelm. Same story from AMD and their apologists, different day.

    Except there might not be too many future days for AMD fanboys and apologists. Time to change that AMD inside t-shirt for the first time in a decade and go for that tattoo removal!
  • Crunchy005 - Friday, January 23, 2015 - link

    Kind of wish you could hear yourself, you are a single minded individual obviously. You tunnel vision Intel and AMD and offer no evidence to support what you say. You just sit here and bash anything anyone says. You really need an attitude adjustment.

    I do like Intel and Nvidia. AMD and Nvidia have been a back and fourth on GPU power for forever and Intel is the superior CPU. Obviously you only focus on what is currently on top and nothing else(ignoring AMD, who you are biased against). You offer no real helpful information either. I like AMD for the innovation they have push and the fact that they take risks is not a bad thing. APU's were pushed by AMD and intel HD graphics started to take off behind them. HSA is starting to mature and hopefully software will follow, and intel will also follow as well i'm sure. Some of the benefits you get from Intel(unimaginative, but efficient company) have come from competition with AMD. Although you will call me an AMD fanboy again and blow off any of this so why am I even trying.
  • Crunchy005 - Friday, January 23, 2015 - link

    yes great product here.

    So what is Nvidias response to this?
  • D. Lister - Wednesday, January 21, 2015 - link

    The only thing that Mantle does is bringing the catalyst drivers on parity with geforce drivers in terms of CPU reliance. Traditionaly (pre-mantle), the Radeons have been much more CPU-sensitive than their Nvidian counterparts (ref: ). Which means that a weaker CPU would impact the performance of a Radeon a lot more (upto 15%, as per the reference link) than it would an equivalent Nvidia based solution. The difference is that instead of making a fundamental change in the drivers to overcome that, AMD gave us "Mantle", a latched-on driver mod which requires individual developer-level changes in every game instead of being automatically applicable universally.
  • chizow - Thursday, January 22, 2015 - link

    Yep exactly, Mantle is and always was a crutch for their lackluster GPUs, because it solved a problem that didn't exist with typical well-balanced builds that used reasonable GPUs with equally paired CPUs.
  • chizow - Thursday, January 22, 2015 - link

    er that should say lackluster CPUs in 1st line.
  • Crunchy005 - Friday, January 23, 2015 - link

    Either way chizow mantle did offer higher frame rates on Intel CPUs as well as AMD CPUs. Again ignoring the fact that it benefited both and was not an issue with just AMD.
  • silverblue - Thursday, January 22, 2015 - link

    But it did push Microsoft to make DirectX more efficient, no?
  • D. Lister - Thursday, January 22, 2015 - link

    Apparently, DX12 development is older than Mantle. The real motivator behind the development of a low level graphics API is the modern consoles, which proved the potential of low-level access. Once DX12, being a much more comprehensive and universal solution, becomes available, Mantle would inevitably get faded out, joining AMD's other short-lived marketing ploys (the awesomeness of DX10.2, Bulldozer's miraculous Win8 performance boost, etc.) in technological history.

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