01—Abstract
Summary
Summary of the 10-Q filed May 9, 2012. Cited figures are marked; the original filing is the authoritative source.
Advanced Micro Devices, Inc. (AMD) reported a net loss of $590 milliona for the quarter ended March 31, 2012, a significant shift from the $510 million net income in the prior year's comparable quarter.
This downturn was heavily influenced by a substantial $703 millionb charge related to a "limited waiver of exclusivity" from GLOBALFOUNDRIES Inc. (GF). Excluding this one-time charge, AMD's adjusted gross margin would have been 46%, indicating a stronger underlying performance. Operationally, net revenue decreased slightly by 2% year-over-year to $1.59 billion.
The company completed the acquisition of SeaMicro, Inc. for $312 millionc to bolster its server technology strategy. Despite the reported loss, AMD generated positive operating cash flow of $107 million, demonstrating some operational resilience.
02—Key points
Key Highlights
- Reported a net loss of $590 million, compared to a net income of $510 million in the prior year's quarter, largely due to a $703 million charge from GLOBALFOUNDRIES.
- Net revenue for the quarter was $1.59 billion, a slight decrease of 2% year-over-year.
- Acquired SeaMicro, Inc. for $312 million to enhance its server technology offerings.
- Operating cash flow was positive at $107 million, indicating cash generation from core operations.
- The company experienced a significant drop in gross margin to 2% from 43% year-over-year, primarily due to the aforementioned GLOBALFOUNDRIES charge.
- Total assets remained relatively stable at $4.99 billion, with a notable increase in goodwill to $553 million, largely from the SeaMicro acquisition.
- Cash, cash equivalents, and marketable securities decreased to $1.54 billion from $1.76 billion at the end of the previous quarter.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2012, Advanced Micro Devices Inc lost $0.37.
- Revenue$1.58B100.0%
- Cost of revenue−$1.56B98.3%
- Gross profit$27.0M1.7%
- Operating costs−$607.0M38.3%
- Operating income−$580.0M36.6%
- Interest, other & tax−$10.0M0.6%
- Net income−$590.0M37.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2012filed May 9, 2012Financial Statements
| Revenue | $1.58B |
| Cost of Revenue | $1.56B |
| Gross Profit | $27.00M |
| R&D Expenses | $368.00M |
| SG&A Expenses | $230.00M |
| Operating Income | -$580.00M |
| Interest Expense | $43.00M |
| Net Income | -$590.00M |
| EPS (Basic) | $-0.80 |
| EPS (Diluted) | $-0.80 |
| Shares Outstanding (Basic) | 734.00M |
| Shares Outstanding (Diluted) | 734.00M |
05—Questions
Frequently Asked Questions
What caused the significant net loss in the first quarter of 2012?
The primary driver of the net loss of $590 million was a substantial charge of $703 million related to a 'limited waiver of exclusivity' from GLOBALFOUNDRIES Inc. This charge consisted of a $425 million cash payment and a $278 million non-cash charge for the fair value of transferred GF capital stock. Excluding this one-time item, the company's financial performance would have been considerably different.
How did the acquisition of SeaMicro, Inc. impact the financials?
AMD acquired SeaMicro, Inc. for $312 million in cash and stock to strengthen its server technology strategy. The acquisition contributed $19 million in cash acquired, $24 million in tangible assets, $109 million in identified intangible assets (including $86 million in developed technology), and $230 million in goodwill. The results of SeaMicro were included in AMD's consolidated financial statements from the acquisition date but were not material to the overall reported results for the quarter.
What is the company's liquidity position and outlook?
As of March 31, 2012, AMD had $1.54 billion in cash, cash equivalents, and marketable securities. The company generated $107 million in net cash from operating activities. Management believes that its current cash position, anticipated cash flow from operations, and available external financing will be sufficient to fund its operations, capital expenditures, and debt repayment over the next twelve months.
How does the amended Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES affect AMD?
The second amendment to the WSA modifies pricing terms for 2012 and establishes a framework for 2013 pricing. It involves a commitment from GF to provide a fixed number of production wafers and a commitment from AMD to purchase them at fixed prices. The amendment also granted AMD rights to contract with other foundries in exchange for a $425 million payment and the transfer of AMD's GF capital stock. AMD estimates it will pay GF approximately $1.5 billion in 2012 for wafer purchases.
06—Continue