10-QPeriod: Q1 FY2014

ADVANCED MICRO DEVICES INC Quarterly Report for Q1 Ended Mar 29, 2014

Filed May 1, 2014For Securities:AMD

Summary

Advanced Micro Devices, Inc. (AMD) reported its first quarter 2014 financial results, showcasing a significant year-over-year increase in net revenue, up 28% to $1.4 billion. This growth was primarily driven by the Graphics and Visual Solutions segment, which saw an 118% increase in revenue, largely due to the introduction of semi-custom System-on-Chip (SOC) products. Despite revenue growth, the company reported a net loss of $20 million for the quarter, an improvement from the $146 million net loss in the prior year's quarter. The company continued its transformation strategy, focusing on diversifying revenue streams. Operational expenses were managed effectively, and AMD strengthened its balance sheet through strategic debt management, including the issuance of new senior notes and repurchasing existing convertible notes. A key development was the fourth amendment to the Wafer Supply Agreement with GLOBALFOUNDRIES (GF), establishing purchase commitments for 2014 and reinforcing a critical supplier relationship, though it also entails a significant estimated obligation of $1.2 billion for the year.

Financial Highlights

54 data points
Beta

Revenue

$1.40B

34.9% Gross Margin

Net Income

-$20.00M

-1.4% Net Margin

EPS (Diluted)

$-0.03

Total Assets

$4.11B

Cash & Equivalents

$554.00M

Free Cash Flow

-$225.00M

Financial Statements
Beta
Revenue$1.40B
Cost of Revenue$910.00M
Gross Profit$487.00M
R&D Expenses$279.00M
SG&A Expenses$156.00M
Operating Income$49.00M
Interest Expense$47.00M
Net Income-$20.00M
EPS (Basic)$-0.03
EPS (Diluted)$-0.03
Shares Outstanding (Basic)761.00M
Shares Outstanding (Diluted)761.00M

Key Highlights

  • 1Net revenue increased by 28% year-over-year to $1.397 billion, driven by strong performance in Graphics and Visual Solutions.
  • 2Graphics and Visual Solutions segment revenue surged by 118% year-over-year to $734 million, boosted by semi-custom SOC products.
  • 3The company narrowed its net loss to $20 million ($0.03 per share) from $146 million ($0.19 per share) in the first quarter of 2013.
  • 4Operating income turned positive at $49 million, compared to an operating loss of $98 million in the prior year's quarter.
  • 5AMD issued $600 million of 6.75% Senior Notes due 2019 and actively repurchased $423 million in principal of its 6.00% Convertible Senior Notes due 2015 and $48 million of its 8.125% Senior Notes due 2017.
  • 6A fourth amendment to the Wafer Supply Agreement with GLOBALFOUNDRIES was executed, establishing volume purchase commitments and fixed pricing for 2014, with an estimated obligation of $1.2 billion for the year.
  • 7Cash, cash equivalents, and marketable securities stood at $982 million, showing a decrease from the prior quarter largely due to a $200 million payment to GF.

Frequently Asked Questions

AMD reported a significant year-over-year increase in net revenue, reaching $1.397 billion, up 28% from $1.088 billion in Q1 2013. While the company still incurred a net loss of $20 million ($0.03 per share), this represents a substantial improvement from the $146 million ($0.19 per share) net loss in the same period last year. Operating income turned positive at $49 million, a marked improvement from a $98 million operating loss in Q1 2013.

The Graphics and Visual Solutions segment was the primary driver of revenue growth, increasing by 118% year-over-year to $734 million. This surge was mainly attributed to the introduction and sales of semi-custom System-on-Chip (SOC) products, alongside an increase in average selling price for GPU products. The Computing Solutions segment saw a slight revenue decline of 12% year-over-year to $663 million, impacted by challenging consumer PC market conditions and lower unit shipments, though average selling prices saw some improvement.

AMD actively managed its debt and liquidity. The company issued $600 million of 6.75% Senior Notes due 2019. It also repurchased significant portions of its outstanding convertible notes, including $423 million in principal of the 6.00% Convertible Senior Notes due 2015 and $48 million in principal of the 8.125% Senior Notes due 2017, incurring losses on these repurchases. Cash, cash equivalents, and marketable securities totaled $982 million at the end of the quarter. The decrease from the prior quarter was primarily due to a $200 million payment to GLOBALFOUNDRIES related to wafer purchase commitments.

The Fourth Amendment to the Wafer Supply Agreement, entered into on March 30, 2014, is significant as it establishes volume purchase commitments and fixed pricing for AMD's wafer purchases from GLOBALFOUNDRIES (GF) for the 2014 calendar year. AMD estimates its purchase obligation to GF under this amendment to be $1.2 billion for 2014, highlighting a critical ongoing relationship and financial commitment to its primary foundry supplier. GF is a related party as it is affiliated with AMD's largest stockholder.