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?

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.

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.

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.