AMD Reports Q4 FY 2014 And Full Year Results

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 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.

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

Intel Reports Record Q4 And Full Year Revenue

Intel released their Q4 FY 2014 results today, and they capped a record year with another record quarter. Revenue for Q4 came in at $14.7 billion, up 6% year-over-year, and for the full fiscal year 2014 revenues were a record $55.9 billion, also up 6%. Gross Margin for the quarter was 65.4%, up 3.4% over the same quarter last year, and Q4 net income was $3.7 billion, up 39% over Q4 2013. Net income for the fiscal year was $11.7 billion, up 22% over 2013. Earnings per share for the most recent quarter came in at $0.74, beating analyst’s expectations of $0.66 per share.

With numbers such as those, one would think Intel is on top of its game, and in the PC market it certainly is. Mobile is a different story for Intel, where it has struggled to gain traction compared to competitors using ARM’s ISA. Intel announced a contra revenue plan in November 2013, where it would subsidize the cost difference and help manufacturers implement Intel based mobile devices rather than ARM. It certainly has been successful, with Intel at the heart of many devices launched last year, including such low cost devices as the HP Stream 7. The plan has been so successful that it has cost Intel an additional $1.1 billion in operating income in Q4 alone, which brings the FY 2014 total to $4.2 billion in loss from this one division, up from the $3.1 billion loss in 2013. Clearly Intel has work to do in order to become cost competitive in this space, and they are likely hedging their bets on their 14 nm process which has just come on-line and the next generation Cherry Trail Atom core.

Looking at the individual groups, the PC Client Group had revenue of $8.9 billion, which was up 3% over the previous year. Volume was up 6%, but average selling price (ASP) was down 2%. Desktop platform volumes were down 1% with a flat ASP, and notebook platform volumes were up 11% with ASP down 3%. As compared to last quarter, revenue was down 3%, platform volumes were down 5%, and ASP was up 3%. While industry analysts IDC and Gartner debate whether the PC slowdown has slowed or rebounded, Intel’s numbers seem to indicate that 2014 was a much better year than was originally projected for the PC market.

The Data Center Group had revenue of $4.1 billion for Q4, which is up 25% year-over-year. Platform volumes were up 15% and ASP was up 10% year-over-year. Quarter-over-quarter, revenue was up 11% and volumes were up 5%, with ASP up 7%. The Data Center Group has been very strong this year, and now accounts for almost 30% of Intel’s revenue. The Xeon line is very strong right now, especially when data centers are often power constrained. Competition from ARM based alternatives is in the early stages, but it will be a tough market to penetrate at the moment.

Internet of Things was all the rage at CES this year, and Intel’s IoT group had revenue of $591 million, up 10% as compared to last year, and up 12% from the previous quarter.

The previously mentioned Mobile and Communications group actually had negative revenue for the quarter, coming in at negative $6 million, which is down from $1 million in revenue last quarter.

Software and services had revenue of $557 million, down 6% year-over-year and flat as compared to Q3.

The “other” group had revenue of $617 million, up 23% over Q4 2013, and up 7% over last quarter.

The big story for Q4 was the availability of the first 14 nm parts, with Core-M devices being launched later in the quarter. The Core-M parts are the very low power offerings though (around 5 watts) and the U series 15-28 watt parts just launched at CES last week. 22 nm was alive for a bit longer than Intel would have hoped, and hopefully the 14 nm delays do not impact the next generation Skylake CPUs.

Outlook for Q1 2015 is revenue of $13.7 billion, plus or minus $500 million, which is down 7% from Q4 2014. Intel says this is normal due to the average seasonal decrease for the first quarter. Gross margin for Q1 is pegged at 60%, which is down 5.4% from Q4, and this is due to higher platform costs for 14 nm products, lower volumes, factory start-up costs, and Skylake pre-qualification costs. Intel is projecting revenue for 2015 to grow in the mid-single digits, and an overall gross margin of 62%.

2014 was a fantastic year for Intel, with record revenues overall. The mobile sector is still a sore spot, and there have already been some changes there with mobile being moved into the PC unit. Many people expected that to be done to mask the losses, but Intel did report it as a separate group for Q4, although that may change in the future. More Core like processors in mobile may be exactly what Intel needs, with higher IPC and the ability to run at a lower clock speed due to good IPC.

Source: Intel Investor Relations

AMD FX-8320E CPU Review: The Other 95W Vishera

Back in September we reviewed the FX-8370E, a new AMD CPU based on the older Vishera/Piledriver architecture but at a lower power – 95W rather than 125W. This was achieved by a combination of a mature 32nm process, adjusting clock speeds and (po…