01—Abstract
Summary
Summary of the 10-Q filed August 10, 2011. Cited figures are marked; the original filing is the authoritative source.
Advanced Micro Devices, Inc. (AMD) reported its second quarter 2011 results, showing a slight decrease in net revenue to $1.57 billiona from $1.65 billion in the prior year period.
The company experienced strong customer demand for its AMD Fusion family of accelerated processing unit (APU) products, particularly the "Brazos" and "Llano" APUs, which contributed to record mobile processor unit shipments and overall microprocessor unit shipments. Despite revenue decline, the gross margin improved to 46% from 45% year-over-year, driven by the richer product mix of APUs. Operating expenses remained flat, leading to operating income of $105 millionb, down from $125 million in Q2 2010.
For the six-month period, net revenue was $3.19 billionc, slightly down from $3.23 billion in the prior year, with gross margin at 44% compared to 46% in the prior year. The company's net income for the quarter was $61 million, or $0.08 per diluted share, a significant improvement from a net loss of $43 million in the same quarter last year, largely due to a substantial gain recognized from dilution of its equity interest in GLOBALFOUNDRIES (GF). The balance sheet shows total assets of $5.22 billion and total liabilities and stockholders' equity of $5.22 billion, with cash and marketable securities totaling $1.86 billion.
A significant development during the quarter was the amendment of the Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES, which altered pricing methodologies for wafers. The company also continued to manage its debt, with long-term debt remaining flat at $2.2 billiond. AMD's strategic focus remains on its APU products, with strong initial adoption, while facing ongoing competitive pressures in the semiconductor market.
02—Key points
Key Highlights
- Net revenue for Q2 2011 was $1.57 billion, a decrease of 5% year-over-year, while gross margin improved to 46% from 45% due to a richer product mix of APUs.
- The company reported a net income of $61 million ($0.08 per diluted share) for Q2 2011, a significant improvement from a net loss of $43 million ($0.06 per diluted share) in Q2 2010.
- Strong customer demand for AMD Fusion APU products ('Brazos' and 'Llano') led to record mobile processor unit shipments and overall microprocessor unit shipments.
- Operating income decreased to $105 million in Q2 2011 from $125 million in Q2 2010, primarily due to revenue decline and increased R&D expenses in the Graphics segment.
- The company amended its Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES, impacting pricing methodologies for future wafer purchases.
- Total cash, cash equivalents, and marketable securities stood at $1.86 billion as of July 2, 2011, slightly up from $1.79 billion at the end of the previous fiscal year.
- The company recognized a non-cash gain of $492 million in the first quarter of 2011 related to the dilution of its ownership in GLOBALFOUNDRIES, which significantly impacted the six-month net income.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Advanced Micro Devices Inc kept $0.04.
- Revenue$1.57B100.0%
- Cost of revenue−$854.0M54.3%
- Gross profit$720.0M45.7%
- Operating costs−$615.0M39.1%
- Operating income$105.0M6.7%
- Interest, other & tax−$44.0M2.8%
- Net income$61.0M3.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed August 10, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $1.57B$1.62B | −2.7% |
| Cost of Revenue | $854.00M$879.00M | −2.8% |
| Gross Profit | $720.00M$739.00M | −2.6% |
| R&D Expenses | $367.00M$359.00M | +2.2% |
| SG&A Expenses | $239.00M$236.00M | +1.3% |
| Operating Income | $105.00M$128.00M | −18.0% |
| Interest Expense | $47.00M$56.00M | −16.1% |
| Net Income | $61.00M-$118.00M | +151.7% |
| EPS (Basic) | $0.08$0.17 | −52.9% |
| EPS (Diluted) | $0.08$0.17 | −52.9% |
| Shares Outstanding (Basic) | 724.00M713.00M | +1.5% |
| Shares Outstanding (Diluted) | 743.00M713.00M | +4.2% |
05—Questions
Frequently Asked Questions
What was the company's revenue performance in the second quarter of 2011?
Net revenue for the second quarter of 2011 was $1.57 billion, a decrease of 5% compared to $1.65 billion in the second quarter of 2010. This was attributed to a decrease in revenue from the Graphics segment, partially offset by stable revenue in the Computing Solutions segment.
How did the company's profitability change in the second quarter of 2011?
Profitability saw a significant improvement. The company reported a net income of $61 million ($0.08 per diluted share) for the second quarter of 2011, compared to a net loss of $43 million ($-0.06 per diluted share) in the same period of 2010. This improvement was driven by higher gross margins and a substantial non-cash gain from the dilution of its investment in GLOBALFOUNDRIES, which was recognized in the first quarter of 2011 and impacted the six-month results.
What is the status of AMD's relationship with GLOBALFOUNDRIES (GF) and its impact on the financials?
AMD amended its Wafer Supply Agreement (WSA) with GF in April 2011, changing pricing methodologies for wafer purchases. In Q1 2011, AMD changed its accounting method for its investment in GF from the equity method to the cost method due to reduced ownership and influence, recognizing a significant non-cash gain of $492 million related to dilution. Purchases from GF in Q2 2011 were $158 million.
What is the company's liquidity position?
As of July 2, 2011, AMD had $1.86 billion in cash, cash equivalents, and marketable securities, an increase of $72 million from December 25, 2010. The company believes its cash position and anticipated cash flow from operations, along with available external financing, will be sufficient to fund operations over the next twelve months.
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