Taking place today is AMD’s 2015 Financial Analyst Day (FAD). For AMD FADs are a combination of roadmap updates and number breakdowns for financial analysts and investors, showcasing where the company intends to go and why investors should conti…
While we admittedly don’t cover much in the way of education/university-related announcements, this one from Imagination this morning caught my eye.
As part of Imagination’s ongoing university relations program, the company is going to …
While we admittedly don’t cover much in the way of education/university-related announcements, this one from Imagination this morning caught my eye.
As part of Imagination’s ongoing university relations program, the company is going to …
Qualcomm released their Q2 financial results today, and they had another strong quarter. Revenues increased 8% from Q2 2014, coming in at $6.9 billion. On a GAAP basis, operating Income took a nose dive to $1.3 billion, down from $2.0 billion last year and $2.1 billion last quarter. This of course means that net income is also much lower, with $1.1 billion being reported for Q2 2015, which is down 46% from last year and 47% from last quarter. GAAP earnings per share came in at $0.63, down from $1.14 last year and $1.17 last quarter.
| Qualcomm Q2 2015 Financial Results (GAAP) | |||||
| Q2’2015 | Q1’2015 | Q2’2014 | |||
| Revenue | $6.894B | $7.099B | $6.367B | ||
| Gross Margin | 19.4% | 29.1% | 31.3% | ||
| Operating Income | $1.336B | $2.064B | $1.990B | ||
| Net Income | $1.053B | $1.972B | $1.959B | ||
| Earnings Per Share | $0.63 | $1.17 | $1.31 | ||
The reason for the large hit to operating income, net income, and EPS is due to Qualcomm having to pay out $975 million to the China National Development and Reform Commission or NDRC. This charge is the resolution that was enacted due to Qualcomm falling afoul of China’s Anti-Monopoly Law, and as such it is a one-time fee. As such, Qualcomm has also released Non-GAAP results which exclude this one time hit to get a better look at how the business is operating. On a Non-GAAP basis, operating income was up 16% year-over-year to $2.7 billion, which is also a 7% gain over last quarter. Net income was up 4% at $2.3 billion, and EPS came in at $1.40 for Q2, as compared to $1.31 last year and $1.34 last quarter.
| Qualcomm Q2 2015 Financial Results (Non-GAAP) | |||||
| Q2’2015 | Q1’2015 | Q2’2014 | |||
| Revenue | $6.894B | $7.099B | $6.367B | ||
| Gross Margin | 39.3% | 35.7% | 36.7% | ||
| Operating Income | $2.707B | $2.531B | $2.337B | ||
| Net Income | $2.339B | $2.263B | $2.255B | ||
| Earnings Per Share | $1.40 | $1.34 | $1.31 | ||
Qualcomm actually had negative cash flow for the quarter. The already mentioned fine paid to China accounted for some of it, and Qualcomm also performed a prepayment of $950 million to secure long-term capacity from one of their suppliers. Those two hits resulted in a $0.7 billion shortfall in cash flow. Last year, they had $1.8 billion in positive cash flow, and last quarter it was $2.4 billion.
For the second quarter, Qualcomm shipped 233 million MSM chips, which is up 24% year-over-year, but down from the 270 million shipped in Q1. Total device sales from Qualcomm licencees was $75.8 billion for the quarter, up 14% year-over-year and up 34% quarter-over-quarter. The company is estimating that 384-388 million 3G/4G devices shipped in Q2, which is up 30% over Q2 2014 and up 35% over Q1 2015. Average Selling Price of 3G/4G devices was $193-$199, which is down 13% year-over-year and 1% from last quarter, as the market moves towards lower cost devices.
| Qualcomm Devices | |||||
| Q2’2015 | Q1’2015 | Q2’2014 | |||
| MSM Chip Shipments | 233M | 270M | 188M | ||
| Total Reported Device Sales | $75.8B | $56.4B | $66.5B | ||
| Est. reported 3G/4G device shipments | 384-388M | 284-288M | 295-299M | ||
| 3G/4G Device Average Selling Price | $193-$199 | $194-$200 | $221-$227 | ||
Qualcomm repurchased 27.8 million shares in Q2, plus paid out $0.42 per share, returning $2.6 billion to shareholders of the company. On March 9th, they announced a new $15 billion stock repurchasing program which includes $10 billion in shares to be bought back in the next twelve months. Additionally, they will be paying out $0.48 per share on June 24th to any shareholder of record as of June 3rd, which is 14% more than last quarter’s payout.
However not everything to come out of the results was good news. Qualcomm has lowered their outlook for the semiconductor business for the second half of FY 2015. Greater competition has reduced Qualcomm’s market share in the SoC space, especially within flagship phones. The two largest phone makers, Samsung and Apple, both use their own designs in their flagship products. This will change Qualcomm’s product mix more heavily towards modem chipsets. There has also been some uncertainly created due to the existing licensing agreements Qualcomm has in place in China due to the resolution with the NDRC. With the case now concluded, the company is hopeful that these arrangements can be sorted out, as they believe that not all devices sold in calendar year 2014 were reported to them.
For Q3, the estimate is that revenues will decline by 9-21% over Q3 2014, which will drop EPS 31% to 41% on a Non-GAAP basis, or 37% to 49% based on GAAP reporting. For FY 2015, Qualcomm is estimating revenue to be between negative 6% and positive 2%.
Source: Qualcomm
Today AMD released their Q1 FY 2015 financial results, and the company reported revenue of $1.03 billion for the quarter. This is a 16.9% decrease as compared to Q4 2014, and a 26.4% decrease from the $1.40 billion recorded in Q1 2014. Operating income based on GAAP numbers was an operating loss of $137 million, which is a substantial decrease in loss as compared to Q4 2014, where they had an operating loss of $330 million, however in Q1 2014 they had a small operating income of $49 million, so although they have improved quarter-over-quarter, that is a significant reduction year-over-year. Net loss for the quarter was $180 million, or $0.23 per share, which once again is better than Q4 2014 where there was a $364 million ($0.47/share) loss, but much worse than the $20 million ($0.03/share) loss in Q1 2014.
| AMD Q1 2015 Financial Results (GAAP) | |||||
| Q1’2015 | Q4’2014 | Q1’2014 | |||
| Revenue | $1.03B | $1.24B | $1.40B | ||
| Gross Margin | 32% | 29% | 35% | ||
| Operating Income | -$137M | -$330M | $49M | ||
| Net Income | -$180M | -$364M | -$20M | ||
| Earnings Per Share | -$0.23 | -$0.47 | -$0.03M | ||
Part of these losses are due to the ongoing restructuring at AMD, which has contributed heavily to these numbers. One of the new restructuring fees is due to the exit from the Seamicro branded dense server business, which has cost them an additional $75 million this quarter, including $7 million in cash. Due to these hits, AMD also provides Non-GAAP results which exclude these numbers. On a Non-GAAP basis, AMD’s operating loss is just $30 million, however that is still down significantly from the $89 million operating income in Q1 2014, and the $52 million operating income from last quarter. Net loss on a Non-GAAP basis is $73 million, or $0.09 per share. This is a decline from Q4 2014 where there was a net income of $18 million ($0.02/share) and Q1 2014 where they were able to achieve a net income of $35 million ($0.05/share).
| AMD Q1 2015 Financial Results (Non-GAAP) | |||||
| Q1’2015 | Q4’2014 | Q1’2014 | |||
| Revenue | $1.03B | $1.24B | $1.40B | ||
| Gross Margin | 32% | 34% | 35% | ||
| Operating Income | -$30M | $52M | $89M | ||
| Net Income | -$73M | $18M | $35M | ||
| Earnings Per Share | -$0.09 | $0.02 | $0.05M | ||
AMD has also entered into a fifth amendment of their agreement with GlobalFoundries, and AMD is expecting to purchase about $1 billion in wafers in 2015.
Breaking down their product segments, the Computing and Graphics segment had a 20% decline in revenue quarter-over-quarter, and a 38% decrease year-over-year, with Q1 having net revenues of $532 million. The quarterly decrease was due to lower desktop and notebook processor sales, whereas the yearly decrease was due to lower desktop processor sales and GPU channel sales. The division had an operating loss of $75 million for the quarter, which is a significant change from the $56 million loss last quarter and the $3 million income in Q1 2014. The loss was partially offset by lower operating expenses, but clearly more work is needed. AMD is hoping for better success with their new APU, Carrizo, which they are expecting to deliver double digit performance increases and much better energy efficiency compared to Kaveri, which is the current APU.
| AMD Q1 2015 Computing and Graphics | |||||
| Q1’2015 | Q4’2014 | Q1’2014 | |||
| Revenue | $532M | $662M | $861M | ||
| Operating Income | -$75M | -$56M | $3M | ||
The Enterprise, Embedded and Semi-Custom segment had a year-over-year revenue decrease of 7%, and a quarter-over-quarter decrease of 14%, with Q1 2015 coming in at $498 million. The quarterly drop is due to a seasonal decrease in semi-custom SoC sales (read: Consoles had a ramp up for the holidays and are now back to lower sales) and the yearly decrease is due to lower numbers of server processors being sold. However this segment did have an operating income to report of $45 million for the quarter, but this is down from the $109 million in Q4 2014 and $85 million in Q1 2014.
| AMD Q1 2015 Enterprise, Embedded and Semi-Custom | |||||
| Q1’2015 | Q4’2014 | Q1’2014 | |||
| Revenue | $498M | $577M | $536M | ||
| Operating Income | $45M | $109M | $85M | ||
The “All Other” segment had an operating loss of $107 million. As compared to Q1 2014, this is $68 million more operating loss, which is primarily due to the $75 million hit for exiting the dense server business. In Q4 2014 this segment had a $383 million loss.
For Q2, AMD is forecasting revenue being down an additional 3%, plus or minus 3%, and non-GAAP Gross Margin to remain flat at 32%.
AMD is certainly not in a great position right now, and the new CEO Dr. Lisa Su has some work to do in order to get AMD back to a financially viable state. Part of that is diversifying revenues, especially with the PC market slowing again. AMD has not had a significant product launch in a few quarters, which has not helped either.
Source: AMD Investor Relations