10-QPeriod: Q1 FY2015

ADVANCED MICRO DEVICES INC Quarterly Report for Q1 Ended Mar 28, 2015

Filed April 29, 2015For Securities:AMD

Summary

Advanced Micro Devices, Inc. (AMD) reported a significant year-over-year decline in net revenue for the first quarter of 2015, with revenue falling 26% to $1.03 billion from $1.397 billion in the prior year period. This downturn was attributed to weaker-than-expected PC market conditions. The company also experienced a substantial net loss of $180 million, a sharp increase from a $20 million net loss in the same quarter last year, resulting in a diluted loss per share of $(0.23). This financial performance reflects ongoing challenges in the semiconductor industry and the company's ongoing strategic transformation. Despite the revenue decline and increased net loss, AMD continued to manage operating expenses, which included restructuring and special charges related to exiting its dense server systems business and a prior restructuring plan. The company ended the quarter with $677 million in cash and cash equivalents, demonstrating a continued focus on liquidity. AMD also highlighted its efforts in engineering milestones related to business diversification, including new mobile APUs and its LiquidVR™ initiative, indicating a strategic push towards high-growth adjacent markets. Investors should note the significant revenue drop and widening net loss, alongside the substantial ongoing restructuring charges. While the company maintains a cash balance, the overall financial performance indicates a challenging period. The strategic shift towards new markets is a key focus, but its success will be crucial for future performance. The company's reliance on GLOBALFOUNDRIES for manufacturing and its substantial debt obligations remain important considerations.

Financial Highlights

54 data points
Beta

Revenue

$1.03B

31.7% Gross Margin

Net Income

-$180.00M

-17.5% Net Margin

EPS (Diluted)

$-0.23

Total Assets

$3.43B

Cash & Equivalents

$677.00M

Free Cash Flow

-$194.00M

Financial Statements
Beta
Revenue$1.03B
Cost of Revenue$704.00M
Gross Profit$326.00M
R&D Expenses$242.00M
SG&A Expenses$131.00M
Operating Income-$137.00M
Interest Expense$40.00M
Net Income-$180.00M
EPS (Basic)$-0.23
EPS (Diluted)$-0.23
Shares Outstanding (Basic)777.00M
Shares Outstanding (Diluted)777.00M

Key Highlights

  • 1Net revenue decreased by 26% year-over-year to $1.03 billion, primarily due to a challenging PC market.
  • 2Net loss widened significantly to $180 million ($0.23 per diluted share) from $20 million ($0.03 per diluted share) in the prior year quarter.
  • 3Restructuring and other special charges totaled $87 million, including $75 million for the exit of the dense server systems business.
  • 4Operating expenses were $463 million, impacted by restructuring charges but demonstrating cost management efforts.
  • 5Cash and cash equivalents and marketable securities stood at $906 million, indicating continued liquidity, though down from the prior quarter.
  • 6The company announced a fifth amendment to its Wafer Supply Agreement with GLOBALFOUNDRIES, establishing commitments for 2015.
  • 7Strategic initiatives included disclosures on new mobile APUs ('Carrizo') and the launch of the LiquidVR™ initiative.

Frequently Asked Questions

The primary reason cited for the significant year-over-year revenue decline was weaker-than-expected PC market conditions.

The $87 million in restructuring and other special charges primarily included $75 million related to the exit of the dense server systems business (formerly SeaMicro), which included an impairment charge of $62 million for acquired intangible assets, and $12 million related to a 2014 restructuring plan for improving operating efficiencies.

AMD has substantial indebtedness totaling $2.3 billion. The company stated it believes its cash and cash equivalents, savings from restructuring, and its Secured Revolving Line of Credit will be sufficient to fund operations over the next 12 months. However, it also notes that future funding needs may require raising capital through debt or equity markets, and that its substantial indebtedness could limit its ability to implement its strategy or fulfill contractual obligations.

AMD is actively pursuing a strategy to focus on markets beyond its core PC business, aiming for approximately 50% of revenue from high-growth adjacent markets by the end of 2015. This includes engineering milestones like new mobile APUs ('Carrizo') and the LiquidVR™ initiative. While the company is investing in these areas, the success of this transformation remains a key factor for future performance and competitive positioning.