10-QPeriod: Q3 FY2012

ADVANCED MICRO DEVICES INC Quarterly Report for Q3 Ended Sep 29, 2012

Filed November 1, 2012For Securities:AMD

Summary

Advanced Micro Devices (AMD) reported a challenging third quarter for 2012, with net revenue declining 25% year-over-year to $1.27 billion. This decline was driven by weak demand across all product lines, attributed to macroeconomic conditions, the rise of tablets, and a cautious approach by OEMs ahead of the Windows 8 launch. Consequently, the company posted a net loss of $157 million for the quarter, a significant reversal from the $97 million net income in the same period last year. In response to these market conditions, AMD announced a restructuring plan in October 2012, involving a 13% workforce reduction and site consolidations, with an estimated charge of $71 million. This plan aims to reduce operating expenses and improve the company's competitive positioning. Despite the headwinds, AMD continues to invest in new product development, including the launch of its SeaMicro SM15000 server chassis and new server graphics cards.

Financial Highlights

55 data points
Beta

Revenue

$1.27B

30.9% Gross Margin

Net Income

-$157.00M

-12.4% Net Margin

EPS (Diluted)

$-0.21

Total Assets

$4.61B

Cash & Equivalents

$776.00M

Free Cash Flow

-$272.00M

Financial Statements
Beta
Revenue$1.27B
Cost of Revenue$877.00M
Gross Profit$392.00M
R&D Expenses$328.00M
SG&A Expenses$188.00M
Operating Income-$131.00M
Interest Expense$44.00M
Net Income-$157.00M
EPS (Basic)$-0.21
EPS (Diluted)$-0.21
Shares Outstanding (Basic)745.00M
Shares Outstanding (Diluted)745.00M

Key Highlights

  • 1Net revenue for the quarter decreased 25% year-over-year to $1.27 billion, reflecting weak demand.
  • 2The company reported a net loss of $157 million for the quarter, compared to a net income of $97 million in the prior year's quarter.
  • 3Gross margin percentage declined significantly to 31%, impacted by a $100 million inventory write-down for older generation APUs.
  • 4Operating loss in the Computing Solutions segment was $114 million, a substantial drop from $149 million income in the prior year's quarter.
  • 5AMD announced a restructuring plan including a 13% workforce reduction, with an estimated charge of $71 million for Q4 2012.
  • 6Cash and cash equivalents, along with marketable securities, decreased to $1.48 billion from $1.765 billion at the end of 2011.
  • 7The company issued $500 million in 7.50% Senior Notes due 2022 and repaid its 5.75% Convertible Senior Notes due 2012.

Frequently Asked Questions

The revenue decline was primarily driven by weak demand across all product lines, attributed to challenging macroeconomic conditions, the increasing popularity of tablets, and a cautious inventory build-up by Original Equipment Manufacturers (OEMs) in anticipation of the Microsoft Windows 8 launch.

AMD announced a restructuring plan in October 2012, which includes a workforce reduction of approximately 13% and site consolidations. This plan aims to reduce operating expenses and improve the company's competitive positioning. The company also continues to invest in new product development for server and graphics markets.

The acquisition of SeaMicro, which closed in March 2012, contributed to the Computing Solutions segment. The results of SeaMicro are now included in AMD's consolidated financial statements, and the acquisition added $230 million in goodwill. The acquisition cost was $312 million.

AMD anticipates that the fourth quarter of 2012 will continue to be challenging, with no expected improvement in PC market conditions for at least several quarters. The restructuring plan is expected to yield operational savings in 2013, but further restructuring actions are anticipated in the first half of 2013, with uncertain associated charges.