AMD Releases Q3 2018 Financial Results

Subject: Editorial | October 24, 2018 - 09:13 PM |
Tagged: amd, quarterly results, Q3 2018, ryzen, EPYC, Polaris, Vega, 7nm, 12nm, Intel, nvidia

This evening AMD announced their Q3 2018 results. Things were at the lower end of the guidance scale from last quarter, but the company still had some solid results. Q3 revenue was $1.65B as compared to Q3 2017’s $1.58B. It is down from the previous quarter’s high of $1.76B. At first glance this seems troubling, but the results are not as negative as one would assume. GAAP net income was a healthy $102M. Q3 2017 was at $61M while Q2 2018 was up at $116M. Profits did not fall nearly as much as one would expect with a decrease of $110M revenue quarter over quarter.

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Probably the largest factor of the decrease was the negligible sales of GPUs to the crypto market. AMD had expected such a dropoff and warned about it in their Q2 guidance. That particular drop off was sudden and dramatic. AMD looks to continue to lose marketshare in add-in graphics due to their less competitive offerings across the spectrum. GeForce RTX sales of course did not impact AMD this previous quarter, but with no new AMD offerings on the horizon users look to have been waiting to see exactly what NVIDIA would release.

Ryzen sales have been steady and strong, making up some of the shortfall from the graphics market. Desktop chips are moving briskly for the company and continues to be a strong seller historically for the company. AMD is also starting to move more mobile processors, but it seems that the majority of parts are still desktop based. AMD looks to continue moving older inventory with aggressive pricing on those and manufacturing of the new 2000 series parts has been relatively smooth sailing for the company.

Enterprise, Embedded, and Semi-Custom had a strong quarter, but with less growth as some analysts had been hoping for. Semi-Custom was weaker this quarter, but IP revenue is up. Console chips are weaker at the moment due to the platforms being relatively mature and not exhibiting the sales of the previous two holiday seasons. To further offset the decrease in Semi-Custom, AMD is reporting that the enterprise products (GPU and EPYC) have seen good growth. Overall this division was down 5% from Q3 2017, but up 7% from the previous quarter.

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Perhaps the most interesting figure of this is Gross Margins. AMD was able to improve margins from 36% to 40%. This 4% increase quarter on quarter is a significant jump for the company. This means that AMD continues to keep costs under control for the company and is able to deliver product more efficiently than in the year before. It is still a far cry from Intel and NVIDIA, which typically have magins between 55% to 65%. AMD has a long ways to go before reaching that kind of level. Part of the margin offset was again due to IP licensing. If IP licensing was removed then we would see 38% margins rather than 40%.

So what are the overall lessons of the past quarter? EPYC sales are not as brisk as analysts had hoped for, but they are also not non-existent. It has shown solid growth for the company and has offset shortfalls in other areas of the company. Their IP and Semi-Custom areas are still very solid, even though AMD does suffer from console lifecycles and downturns. GPUs continue to sell, but not nearly at the rate they were due to the crypto market. Their Polaris based options are well suited to compete in the sub-$300 US market. The Vega based products were finally down to MSRP, but they had a harder time going against the mature and well liked GeForce GTX 1070 and 1080 products. This will be further compounded with the introduction of the RTX products in those price ranges.

Ryzen continues to be a very good seller across the board. I had hoped that AMD would break down numbers between Ryzen CPUs and APUs, but I have not seen numbers that hint at what ratio they sell at. In retail the Ryzen 2000 series CPUs look to be some of the most popular products based on price/performance. However, retail is only a small portion of processor sales and Intel still holds the vast majority of marketshare here. AMD is competing, but they have not taken significant chunks from their competition over the past year. They have done enough to achieve several positive quarters in a row, but this is not the slam dunk that the original Athlon 64 was back in 2003/2004.

AMD expects further weakness in their results next quarter. Guidance is for revenue around $1.45B, plus or minus $50M. This is still higher than Q4 2017 results, but it is a significant drop from Q3 results. AMD expects strong Ryzen, EPYC, and datacenter GPU growth during this time. It is expected that consumer GPU and Semi-Custom will continue to drop. There does look to be a 7nm GPU introduction this next quarter, but it is probably the long rumored Vega refresh that will be aimed directly at datacenter rather than consumer.

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2018 has so far been a year of solid growth and execution for AMD on the CPU side. Their GPU side has suffered a bit of a slide, but this is to be expected by how much belt-tightening AMD has done in the past several years to get their CPU architecture back on track. The lion’s share of development resources was shunted off to the CPU side while the GPU side had to fight for scraps. I believe this is no longer the case, but when development takes years for new GPUs the injection of new resources will not become apparent for a while.

2019 continues to look better for AMD as they are expecting an early release of 7nm EPYC parts which should compete very well with Intel’s 14nm based Xeon products. AMD is expecting a significant uptick in sales due to the thermals, pricing, and performance of these new Zen 2 based parts. The company also continues to point to the end of 1H for introduction of 7nm Ryzen parts based on Zen 2. These will be showing up quite a few months before Intel’s 10nm offerings will be available. Rumors have it that the new Zen 2 based parts exhibit a significant IPC increase that should make them far more competitive to the best that Intel has on the desktop and mobile markets. Combine these IPC improvements with the 7nm boost in power and clocks for the parts, and AMD could have a very good product on their hands. AMD also is expecting a 1H release of 7nm Navi GPUs which should prove to be more competitive with current NVIDIA products that rely on 16nm and 12nm process nodes from TSMC.

While Q3 was a drop in revenue for the company, their current cost structure has still allowed them to make a tidy profit. The company continues to move forward with new products and new developments.

 
Source: AMD

AMD Announces Q4 2016 and FY 2016 Results

Subject: Editorial | January 31, 2017 - 11:14 PM |
Tagged: Vega, ryzen, quarterly results, Q4 2016, Q4, FY 2016, amd, AM4

Today AMD announced their latest quarterly earnings.  There was much speculation as to how well or how poorly the company did, especially in light of Intel’s outstanding quarter and their record year.  Intel has shown that the market continues to be strong, even with the popular opinion that we are in a post-PC world.  Would AMD see a strong quarter, or would Intel take further bites out of the company?

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The results for AMD are somewhere in between.  It was not an overly strong quarter, but it was not weak either.  AMD saw strength in the GPU market with their latest RX series of GPUs for both desktop and mobile applications.  Their CPU sales seemingly were flat with limited new products in their CPU/APU stack.  AMD is still primarily shipping 32nm and 28nm products and will not introduce 14nm products until Ryzen in late Q1 of this year.  While AMD has improved their APU offerings at both mobile and desktop TDPs, they still rely on Carrizo and the Bristol Ridge derivative to provide new growth.  The company’s aging Piledriver based Vishera CPUs still comprise a significant portion of sales for the budget and midrange enthusiast markets.

The company had revenues of $1.11B US for Q4 with a $51M net loss.  Q3 featured revenues of $1.31B, but had a much larger loss of $293M.  The primary factor for that loss was the $340M charge for the adjusted wafer start agreement that AMD has with GLOBALFOUNDRIES.  AMD did make less this past quarter, but they were able to winnow their loss down to the $51M figure.  

While AMD stayed steady with the CPU/APU and GPU markets, their biggest decline came in the semi-custom products.  This is understandable due to the longer lead times on these products as compared to AMD’s CPUs/APUs and GPUs.  The console manufacturers purchase these designs and then pay out royalties as the chips are produced.  Sony and Microsoft each had new console revisions for this holiday season that feature new SoC designs from AMD for each.  To hit the holiday rush these companies made significant orders in Q2 and Q3 of this year to allow delivery in Q4.  Once those deliveries are made then Sony and Microsoft dramatically cut orders to allow good sell-through in Q4 and not have massive unsold quantities in Q1 2017.  With royalties down with fewer chips being delivered, AMD obviously suffers at the hand of seasonality typically one quarter sooner than Intel or NVIDIA does.

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For the year AMD had nearly $300M more in revenue as compared to 2015.  2016 ended at $4.27B as compared to 2015’s $3.99B.  This is generally where AMD has been for the past decade, but is lower than they have seen in years past with successful parts like Athlon and their Athlon 64 parts.  In 2005 AMD had $5.8B in revenue.  We see that AMD still has a way to go before matching some of their best years as a company.

One of the more interesting aspects is that even through these quarterly losses AMD has been able to increase their cash on hand.  AMD was approaching some $700M a few years back and with the losses they were taking it would not be all many years before liquidity was non-existent.  AMD has been able to build that up to $1.26B at the end of this quarter, giving them more of a cushion to rely upon in tight times.

AMD’s year on year improvement is tangible, but made more impressive when considering how big of an impact the $340M charge that the WSA incurred.  This shows that AMD has been very serious about cutting expenses and monetizing their products to the best of their ability.

This coming year should show further improvement for AMD due to a more competitive product stack in CPUs, APUs, and GPUs.  AMD announced that Ryzen will be launching sometimes this March, hitting the Q1 expectations that the company had in the second half of 2016.  Previous to that AMD thought they could push out limited amounts of Ryzen chips in late Q4 2016, but that did not turn out to be the case.  AMD has shown off multiple Ryzen samples running anywhere from 3.2 GHz base with a potential engineering sample with a boosted speed up to 4 GHz.  Ryzen looks far more competitive against Intel’s current and upcoming products than AMD has in years.

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The GPU side will also be getting a boost in the first half of 2017.  It looks like the high end GPU Vega will be launching in Q2 2017.  AMD has addressed the midrange and budget markets with the Polaris based chips but has been absent at the high end with 14nm chips.  AMD still produces and sells Fury and Nano based offerings that somewhat address the area above the midrange, but they do not adequately compete with the NVIDIA GTX 1070 and 1080 products.  Vega looks to be competitive with what NVIDIA has at the high end, and there is certainly a pent up demand for an AMD card in that market.

AMD had a solid 2016 that showed that the current management team could successfully lead the company through some very challenging times.  The company continues to move forward and we shall see new products with CPUs, GPUs, and motherboards that should all materially contribute to and expand AMD’s bottom line.

Source: AMD

Intel Earnings Report (Q2 2014)

Subject: General Tech, Processors, Mobile | July 16, 2014 - 03:37 AM |
Tagged: quarterly results, quarterly earnings, quarterly, Intel, earnings

Another fiscal quarter brings another Intel earnings report. Once again, they are doing well for themselves as a whole but are struggling to gain a foothold in mobile. In three months, they sold 8.7 billion dollars in PC hardware, of which 3.7 billion was profit. Its mobile division, on the other hand, brought in 51 million USD in revenue, losing 1.1 billion dollars for their efforts. In all, the company is profitable -- by about 3.84 billion USD.

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One interesting metric which Intel adds to their chart, and I have yet to notice another company listing this information so prominently, is their number of employees, compared between quarters. Last year, Intel employed about 106,000 people, which increased to 106,300 two quarters ago. Between two quarters ago and this last quarter, that number dropped by 1400, to 104,900 employees, which was about 1.3% of their total workforce. There does not seem to be a reason for this decline (except for Richard Huddy, we know that he went to AMD).

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Image Credit: Anandtech

As a final note, Anandtech, when reporting on this story, added a few historical trends near the end. One which caught my attention was the process technology vs. quarter graph, demonstrating their smallest transistor size over the last thirteen-and-a-bit years. We are still slowly approaching 0nm, following an exponential curve as it approaches its asymptote. The width, however, is still fairly regular. It looks like it is getting slightly longer, but not drastically (minus the optical illusion caused by the smaller drops).

Source: Intel

The Health of Intel's Many Divisions...

Subject: General Tech, Processors, Mobile | April 16, 2014 - 08:40 PM |
Tagged: Intel, silvermont, arm, quarterly earnings, quarterly results

Sean Hollister at The Verge reported on Intel's recent quarterly report. Their chosen headline focuses on the significant losses incurred from the Mobile and Communications Group, the division responsible for tablet SoCs and 3G/4G modems. Its revenue dropped 52%, since last quarter, and its losses increased about 6%. Intel is still making plenty of money, with $12.291 billion USD in profits for 2013, but that is in spite of Mobile and Communications losing $3.148 billion over the same time.

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Intel did have some wins, however. The Internet of Things Group is quite profitable, with $123 million USD of income from $482 million of revenue. They also had a better March quarter than the prior year, up a few hundred million in both revenue and profits. Also, Mobile and Communications should have a positive impact on the rest of the company. The Silvermont architecture, for instance, will eventually form the basis for 2015's Xeon Phi processors and co-processors.

It is concerning that Internet of Things has over twice the sales of Mobile but I hesitate to make any judgments. From my position, it is very difficult to see whether or not this trend follows Intel's projections. We simply do not know whether the division, time and time again, fails to meet expectations or whether Intel is just intentionally being very aggressive to position itself better in the future. I would shrug off the latter but, obviously, the former would be a serious concern.

The best thing for us to do is to keep an eye on their upcoming roadmaps and compare them to early projections.

Source: The Verge

Intel Announces Q2 Results: Below Expectations, but Still Good

Subject: Editorial | July 17, 2013 - 09:34 PM |
Tagged: silvermont, quarterly results, money, Lenovo, k900, Intel, atom, 22 nm tri-gate, 14 nm

Intel announced their Q2 results for this year, and it did not quite meet expectations.  When I say expectations, I usually mean “make absolutely obscene amounts of money”.  It seems that Intel was just shy of estimates and margins were only slightly lower than expected.  That being said, Intel reported revenue of $12.8 billion US and a net income of $2 billion US.  Not… too… shabby.

Analysts were of course expecting higher, but it seems as though the PC slowdown is in fact having a material effect on the market.  Intel earlier this quarter cut estimates, so this was not exactly a surprise.  Margins came in around 58.3%, but these are expected to recover going into Q3.  Intel is certainly still in a strong position as millions of PCs are being shipped every quarter and they are the dominant CPU maker in its market.

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Intel has been trying to get into the mobile market as it still exhibits strong growth not only now, but over the next several years as things become more and more connected.  Intel had ignored this market for some time, much to their dismay.  Their Atom based chips were slow to improve and typically used a last generation process node for cost savings.  In the face of a strong ARM based portfolio of products from companies like Qualcomm, Samsung, and Rockchip, the Intel Atom was simply not an effective solution until the latest batch of chips were available from Intel.  Products like the Atom Z2580, which powers the Lenovo K900 phone, were late to market as compared to other 28 nm products such as the Snapdragon series from Qualcomm.

Intel expects the next generation of Atom being built on its 22 nm Tri-Gate process, Silvermont, to be much more competitive with the latest generation offerings from its ARM based competitors.  Unfortunately for Intel, we do not expect to see Silvermont based products until later in Q3 with availability in late Q4 or Q1 2014.  Intel needs to move chips, but this will be a very different market than what they are used to.  These SOCs have decent margins, but they are nowhere near what Intel can do with their traditional notebook, desktop, and server CPUs.

To help cut costs going forward, it seems as though Intel will be pulling back on its plans for 14 nm production.  Expenditures and floor space/equipment for 14 nm will be cut back as compared to what previous plans had held.  Intel still is hoping to start 14 nm production at the end of this year with the first commercial products to hit at the end of 2014.  There are questions as to how viable 14 nm is as a fully ramped process in 2014.  Eventually 14 nm will work as advertised, but it appears as though the kinks were much more complex than anticipated given how quickly Intel ramped 22 nm.

Intel has plenty of money, a dominant position in the x86 world, and a world class process technology on which to base future products on.  I would say that they are still in very, very good shape.  The market is ever changing and Intel is still fairly nimble given their size.  They also recognize (albeit sometimes a bit later than expected) shifts in the marketplace and they invariably craft a plan of attack which addresses their shortcomings.  While Intel revenue seems to have peaked last year, they are addressing new markets aggressively as well as holding onto their dominant position in notebooks, desktops, and server markets.  Intel is expecting Q3 to be up, but overall sales throughout 2013 to be flat as compared to 2012.  Have I mentioned they still cleared $2 billion in a down quarter?

Source: Intel