AMD Q2 loss shrinks as revenue beats expectations
AMD sees improved factory utilization, increased 45-nm CPU shipments and 40-nm GPU shipments, and an improved product mix as it looks to Q3.
By Suzanne Deffree, Managing Editor, News -- EDN, July 22, 2009
Advanced Micro Devices Inc may not have reported June quarter revenue as high as some analysts had predicted, but the company's $1.184 billion in Q2 sales still managed to best general Street expectations for revenue of $1.13 billion.
Revenue was flat sequentially and down 13% from the same period a year ago. Comparing the first half of 2009 to the same period a year ago, revenue was down 17%, according to statements made by AMD CFO Bob Rivet on the company's quarterly call Tuesday afternoon.
In Q2, loss improved, but did not disappear for AMD. The company reported a net loss of $330 million and an operating loss of $249 million. AMD reported Q1 net loss of $416 million and a Q1 operating loss of $298 million. In Q2 2008, AMD reported a net loss of $1.195 billion and an operating loss of $569 million.
Q2 gross margin of 37% compared to Q1 gross margin of 43%. Financial analysts noted the "disappointing" gross margin fall in their reports. The fall, according to FBR Capital Markets Analyst Craig Berger, was largely due to low fab utilizations at GlobalFoundries, AMD's manufacturing spinoff. "Apparently, GlobalFoundries' wafer pricing remains at 'cost plus,' which means AMD took the hit for low fab utilization rates in Q2," he wrote in a research note this morning. "Encouragingly, management expects fab utilization rates and gross margins to meaningfully rise sequentially in Q3 and Q4, with Q4 gross margins hopefully approaching 40%."
Berger, as well as other industry watchers including Broadpoint AmTech Analyst Doug Freedman, earlier this week showed support for AMD as they anticipated significant sequential gains in revenue and a strong second half for the company. Despite AMD's stock dropping in today's morning trading by more than 11% as of 10:54am eastern, the analysts have not given up hope for an AMD longer term recovery.
"The September quarter likely possesses more of the positive news we were expecting this quarter as product transitions near completion and growth across revenue, margins, and EPS [earnings per share] begins to take shape," Freedman said in a research note this morning. "We continue to expect strong 2H [second half] growth and potential earnings leverage as: 1) transition cycle to 45 nm (CPU) progresses and 40 nm (GPU) accelerates; 2) Caspian and Tigris become available; and 3) server demand moderately recovers."
AMD was positive, but cautious in giving its Q3 outlook.
"In light of the continuing uncertainty in the macroeconomic environment, AMD expects revenue to be up slightly," Rivet said on the company's call. "We expect gross margin to improve from the current levels, driven by improved factory utilization, increased 45-nm CPU shipments and 40-nm GPU shipments, and improved product mix from the introduction of our Tigris notebook platform, our DX11-ready GPU family, as well as a full quarter impact of shipping the six-core Opteron server processors."
Rivet further said that AMD has lowered its capital expenditures for 2009, as it continues to evaluate capital needs for the year. "Capex for AMD, the product company, will be about $100 million, down from prior plans for $150 million for the year, and about $690 million for GlobalFoundries, down from the prior guidance of $760 million," he estimated.
AMD's closest rival, Intel Corp, announced Q2 results a week before AMD. Intel's results showed sequential revenue gains and a June quarter loss.
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You do not know how to read a financial statement.
The only reason AMD's revues looked
lioke an incrfease was due to the fact that they had written off obsolete inventory last quarter and sold it this quarter making it look like increae in reevenue. AMD feeds the media untruths and you buy it due to your ignorance in these matters.
Murray Scheck - 2009-23-7 06:36:00 PDT
