AMD Q1’12 Earnings Report: $1.59B Revenue, $590M Net Loss
by Ryan Smith on April 20, 2012 3:00 AM ESTIt’s the middle of April and that means it’s once again earnings season for the prior quarter.
Late yesterday AMD released their earnings report for Q1 2012, and it turned out to be a bit of a doozy. For the quarter AMD brought in $1.59 billion in revenue, with a net loss of $590 million. This is compared to $1.61B in revenue and a $510M net profit in Q1 of 2011, meaning AMD’s revenue is slightly down on a year-over-year basis, while their net income went well into the red.
| AMD Q1 2012 Financial Results | |||||
| Q1'2012 | Q4'2011 | Q1'2011 | |||
| Revenue | $1.59B | $1.69B | $1.61B | ||
| Net Income | -$590M | -$177M | $510M | ||
Overall, while things have been going modestly well for AMD lately thanks to the strength of their product lineup, their stake in Global Foundries has continued to drag down the company’s profits. In Q4’11 AMD had to take $209M charge that drove them into the red then, and Q1’12 has not fared any better.
As you may recall, last month AMD fully divested themselves of Global Foundries, eliminating their 8.8% share of the company. This divestment was part of a larger revision of AMD’s wafer agreement with GloFo, which saw AMD giving up their share in the foundry as part of a larger payment to GloFo in order to get out of a previous exclusivity agreement with GloFo that had entitled them to production rights on some 28nm APUs. Altogether AMD has taken a $703M charge, composed of cash and and their GloFo stake, in order to get out of using GloFo's 28nm process; and that's every bit as bad as it sounds.
The good news of course is that AMD’s GloFo-related financial troubles are almost at and end now that they no longer hold a stake in GloFo, with the bad news being that there are still a few more payments to go until they’re fully freed. On top of the $703M charge for Q1, AMD owes a further $275M to GloFo over the next year, with AMD choosing to write all of this off in their $703M charge for Q1. However once they’re paid off next year, that’s it – AMD will have no further financial ties to GloFo, with the only remaining ties being the contract fab work GloFo does for AMD.
In any case, not counting their problems with GloFo, AMD’s non-GAAP net income for Q1’12 would have been $92M, which is a small but notable increase over their non-GAAP net income of $56M in Q1’11. Even though revenues were down, AMD’s operating income from both GPUs and CPUs is up versus 2011, reflecting the higher gross margin attached to AMD’s latest generation of products.
| AMD Q1 2012 Computing Solutions Division Financial Results | |||||
| Q1'2012 | Q4'2011 | Q1'2011 | |||
| Revenue | $1.203B | $1.309 | $1.2B | ||
| Operating Income | $124M | $165M | $100M | ||
In particular, on the CPU side of things the average sale price for AMD CPUs has held steady, but overall costs have come down slightly, making it a net win for AMD. CPU revenue for Q1’12 was $1.203B with an operating income of $124M, versus $1.2B and $100M for Q1’11. All things considered Bulldozer doesn’t seem to have lit a fire under AMD, and the lack of new APUs to replace Brazos isn’t helping, but at the very least AMD is holding their ground.
| AMD Q1 2012 Graphics Division Financial Results | |||||
| Q1'2012 | Q4'2011 | Q1'2011 | |||
| Revenue | $382M | $382M | $413M | ||
| Operating Income | $34M | $27M | $19M | ||
Meanwhile on the GPU side of things this was the first quarter where AMD’s new Southern Islands GPUs were shipping, which is both good news and bad news for AMD. Traditionally quarters where major new GPU architectures are introduced see lower revenue as customers hold off on purchases, and with the launch of Southern Islands early in the year this was no exception. However new GPUs also launch at higher prices, which pushes margins up. The net result is that while revenue takes a step back profits increase, which is exactly what AMD needs at the moment.
Altogether AMD booked $382M of GPU revenue in Q1’12 with an operating income of $34M, versus 413M in revenue with an operating income of only $19M in Q1’11. The increase in operating income over Q1’11 is thanks in large part to AMD’s nearly quarter-long 28nm product lead, combined with AMD’s conservative pricing. Q2’12 should see revenue improvements as AMD will have been shipping desktop SI GPUs for the entire quarter along with introducing mobile SI GPUs, however as we saw earlier this week AMD’s conservative pricing has already eroded due to a need for price cuts, meaning that AMD’s margins will likely be going down.
Moving forward, Q2’12 is widely expected to see the launch of AMD’s Trinity APU, which should give their CPU business a shot in the arm. At the same time we’re expecting AMD to finally launch Southern Islands products for the mobile market, which will be important for AMD as their mobile GPUs are high volume products.
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silverblue - Friday, April 20, 2012 - link
Hehe ignore the last part; AMD aren't exactly going to go for something they've paid to get out of.silverblue - Friday, April 20, 2012 - link
LOL I may have to ignore the ignore; according to Charlie, apparently AMD has signed a deal with GloFo to produce Kaveri on their 28nm process for release early 2013.http://semiaccurate.com/2012/04/20/where-will-amd-...
JarredWalton - Friday, April 20, 2012 - link
Charlie? Here's your salt shaker.... ;-)Spoelie - Friday, April 20, 2012 - link
Hey, he's often right on the mark. Forecasted Kepler would be the winner vs GCN 3 months ahead of launch, the only site where I read that, and lo and behold...http://semiaccurate.com/2012/01/19/nvidia-kepler-v...
Or was there a story here about that as well? Reading the comments of that article now in retrospect is kind of funny.
Kjella - Saturday, April 21, 2012 - link
"No losses from fabs." Well, perhaps not directly but AMD lose money when the foundries don't get the process ready in time. They lose money when they have to cancel gate-first designs at GloFo and start over with gate-last at TSMC. Against nVidia that's probably not a big deal as they're in the same boat but versus Intel it's a very big deal. Not only because of cost but also because of power efficiency which means longer battery life and cheaper data centers. For once Intel's schedule has slipped a bit too letting AMD get off easy in Q1 but this coming week I expect Ivy Bridge. And comparing AMDs roadmap with Intel's tick-tock roadmap, it's not going to get easier...bassbeast - Thursday, April 26, 2012 - link
I think you are wrong, and here is why...CONSUMERS! you see consumers don't read benchmarks, they don't care about logos, all they know is those AMD netbooks and laptops are REALLY affordable while letting them do light gaming and more importantly letting them enjoy HD video with zero stutter or lag. I mean you can get a nice AMD Brazos netbook in the $350-$430 range (I lucked out and hit a sale and got an E350 for $350 with an 8Gb of RAM upgrade AND a carrying case) that they can not only carry but pop an HDMI cable into and make it into an HTPC you can carry around.The two big screw ups AMD did IMHO was killing Thuban (which made a great affordable desktop line and thanks to turning off cores/cache could cover the ENTIRE Phenom II and Athlon line while giving those willing to core unlock a chance at a free upgrade) and the killing of the Brazos update Krishna but knowing what we now know about GloFlo it was probably smart to kill it and go for an update of Brazos with TSMC instead.
Walk into any Walmart or other B&M store and you'll see Fusion stickers everywhere and talking to friends that work at these shops they sell like hotcakes. I think they have a real winner with the Bobcat design and if they can make say a 4 or 6 core version with a more midrange GPU this will further cement that big chunk of the consumer market because bobcats are cheap to make and run well. I think we can all agree that Bulldozer is a failure but if they can get the new GPU, which they are trading VLIW for vector based BTW, they should be able to salvage the design. You see the weak spot of the BD/PD design is two integers but only one FP unit per pair, but with vector basing they should be able to use the built in GPU as a super powered FP unit.
So I'd say the future looks bright for AMD, especially once they are completely done with GloFlo as anything but one contractor of many. Sure they won't be beating Intel but as Jobs said you don't HAVE to kill the giant to carve out a profitable niche and frankly AMD does make a good value for consumers. Who doesn't like netbooks that get 6+ hours, plays 1080p, never gets hot, and is affordable to boot?
Wreckage - Friday, April 27, 2012 - link
Tablets are starting to eat into the netbook market and ARM netbooks are on the way. So that segment will be shrinking for AMD.medi01 - Monday, April 30, 2012 - link
Except he was talking notebooks, not netbooks. And as it stands now, tablets are toys (and yes, I own one) you can't compare them to notebooks.Shadowmaster625 - Friday, April 20, 2012 - link
When they release a cpu that is a whopping 3 times slower than intel at superpi, is it any surprise they are not making money? They should be bankrupt after pulling that stunt.Mathos - Friday, April 20, 2012 - link
Yes because as we all know.. Super Pi is the be all end all of computer productivity or gaming apps...... I guess Intel deserved to go bankrupt over the p4?