The AMD Execution Thread [2007 - 2017]

[Razor1]

Did they say anything about their 2016 APU and FinFETs? It is looking increasingly likely that they'll just vaguely re-heat Carrizo on 28nm, which I think would be disastrous.

I missed the fist half of the conference call so don't know. They did mention Carrizo, its still on target. FinFets, looks to be fine sometime in 2016 they will release chips on FinFets nodes.

http://ir.amd.com/phoenix.zhtml?c=74093&p=irol-eventDetails&EventId=5197432

Q2 2015 financial statements

 

[Alatar]

It's already known that Zen based APUs are 2017 products and wont make an appearance in 2016.

I very much doubt that we'll be seeing a carizzo shrink to finfet so I expect them to ride the current APU lineup until 2017. Maybe with some refreshes.

It's pretty clear that what AMD wants is some high margin sales from Zen asap. Even a small piece of the current Xeon market would immensely help AMD. That and steady semi custom income.

But right now those computing and graphics segment numbers are pretty brutal. Down over 50% YoY and a 150m loss with sub 400m revenue. That's just terrible and there's no way getting around it.

 

[ninelven]

Yeeesh... gross margin of 25% is pretty brutal. I can't even really fathom how it is that bad :/.

 

[homerdog]

Margins down 25%! Is that a typo? That is absolute death.

 

[Deleted member 2197]

Here's a closer breakdown of the company's performance, by department:

• Computing and graphics: Segment revenue decreased 29 percent sequentially and 54 percent compared to the same quarter a year ago. AMD says the decrease was due to a drop in sales to OEMs of client notebook processors, while the annual decrease was due to decreased sales in client and graphics product lines.

• Enterprise, embedded and semi-custom: Segment revenue increased 13 percent driven by higher sales of semi-custom SoCs. AMD blames the year-over-year decrease of 8 percent to decreased server sales and lower non-recurring engineering (NRE) revenue.

For Q3 2015, AMD expects revenue to increase 6 percent, plus or minus 3 percent, sequentially.

In after hours trading, AMD's stock price fell almost 5 percent.

http://www.zdnet.com/article/amd-q2-earnings-2015/

 

[Deleted member 2197]

So what's next for AMD? Well, we know it's not going to splinter into different parts. Instead, some belt-tightening may be in the offing. The chipmaker's workforce is already 8 per cent smaller than it was a year ago, and we wouldn't be surprised to see it shrink further.

But hope springs eternal for AMD's chief exec. In a conference call with financial analysts on Thursday, Su said she expects sales of the company's "Carrizo" SoCs for notebooks, which haven't been shifting very much lately, will pick up once Windows 10 ships at the end of the month.

Su has also brought in a new fall guy boss to run AMD's tattered Computing and Graphics business in the form of Jim Anderson, an exec that she poached from Intel at the beginning of June. Among other things, he presided over Intel's $650m purchase of the Axxia network processor business from Avago.

"Jim began his career as a processor architect and has held several leadership, business management, and engineering roles across multiple tech companies," Su said. "He is the ideal leader to return CG to a positive trajectory as we focus on stabilizing the business and then re-gaining profitable share."

We'll believe that one when we see it. ®

http://www.theregister.co.uk/2015/07/16/amd_q2_2015_results_bloodbath/

 

[sheepdogexpress]

Margins down 25%! Is that a typo? That is absolute death.

After Nvidia released the gtx 970, AMD margins have been terrible. Intel has been generally gentle for the last 5 years. On the other hand, Nvidia seems to want to knock out AMD with the release of the gtx 970 and gtx 980 ti. The aims of these products is have partially revenue driven but partially done to prevent AMD from making money.

With the 6 percent increase sequentially for next quarter outlook(which is usually among the strongest of the year), AMD is certain to lose 100 million plus next quarter.

 

[homerdog]

My you're an optimist! Losing $100 million would be a huge improvement!!

 

[Razor1]

That 70 million a quarter interest on their loans are certainly hurting them......

If they didn't have that they could keep it fairly flat even with the weak market segments.

 

[Ryan Smith]

Margins down 25%! Is that a typo? That is absolute death.

Relatively speaking, AMD sold too much low margin semi-custom stuff due to how weak notebook APU sales were. Overall revenues were $379M C&G, $563M EESC.

On top of that they took a 3 percentage point hit due to the $33M charge to port their remaining 20nm products to FinFET. So excluding that charge (and it's rare to have charges affect the GM like this, even for AMD), the GM was 28%. Which still isn't where it needs to be, and the non-GAAP GM for Q3 is only expected to be 29%.

 

[Deleted member 2197]

Revenues of Advanced Micro Devices have been declining for many quarters now, as a result, the company has to lower its spending on research and development as well as on multitude of other things. In the last five years AMD’s R&D spending dropped by almost 50 per cent: from $432 million in Q4 2009 to $225 million in Q2 2015 as a result of revenue drops as well as AMD’s attempts to demonstrate profitability.
...
In a bid to support its ongoing R&D operations, AMD already increased research and development spending as a percentage of revenue to 23.8 per cent in Q2 compared to 22.5 per cent in Q1. Since the company expects its sales to increase in the third quarter, it will naturally be able to either further increase its R&D expenses, or at least maintain them at the current levels.
...
KitGuru Says: While it is nice to see that AMD cares about its mid-term and long-term future, it is clear that in order to be truly competitive with its rivals, the company will have to invest more in R&D, not only in terms of absolute dollars, but also as a percentage of revenue. For example, Nvidia spends around 30 per cent of its revenue on R&D, which is why its research and development budget has surpassed that of AMD despite of similar quarterly revenues. Moreover, as AMD transits its products to FinFET manufacturing technologies, its expenses on chip design will triple. Therefore, either AMD increases its sales and boosts its R&D budget, or it will have to increase its R&D spending as a percentage of revenue…

http://www.kitguru.net/components/g...to-keep-rd-investments-at-appropriate-levels/

 

[silent_guy]

I wonder where the 'expenses on chip design will triple' comes from?
I don't know the tape-out prices for the latest and greatest processes anymore, and maybe that's 3x more expensive, but tape-out costs are only a small fraction of the total chip development cost, and there's no reasons why the other parts would go up that much.

 

[UniversalTruth]

How does this increase in R&D spending happen? What exactly do they do - increase someone's salaries? Pay salaries to more people ? Or... buy data from somewhere?

 

[Deleted member 13524]

How does this increase in R&D spending happen? What exactly do they do - increase someone's salaries? Pay salaries to more people ? Or... buy data from somewhere?

Hire new people, poaching (within legal actions), purchase more equipment, purchase fresh IP from universities and research centers, fund scholarships and projects in universities, etc.
I'd say the only way to get better short to mid-term results is with the first three, though.

 

[Alexko]

US markets have been falling over the last few days, but AMD fell particularly hard, especially yesterday, when it dropped to $1.65, leading to a market capitalization of less than $1.30 billion.

I think this might be an all-time low for the stock.

 

[eastmen]

US markets have been falling over the last few days, but AMD fell particularly hard, especially yesterday, when it dropped to $1.65, leading to a market capitalization of less than $1.30 billion.

I think this might be an all-time low for the stock.

really wouldn't be surprised to hear someone buying them soon

 

[Razor1]

for AMD to be bought out the debt would have to be part of the deal too, which is why its unlikely. According to the cross licensing agreement, AMD will lose the x86 license while Intel will keep the x64 license which will make the CPU division of AMD useless;

http://www.sec.gov/Archives/edgar/data/2488/000119312509236705/dex102.htm

All that will be left form the AMD buyout will be ARM processors and GPU's. Consoles will get scratched off the list because of the termination of the x86 license.

If AMD files for bankruptcy the same situation occurs without the penalty of bailing out the debt, which is more advantageous then a buyout right now which will increase risk greatly.

 

[3dilettante]

The modification to the agreement's duration and coverage is interesting to me. It will persist until the last covered patents expire, but it has put a stop to any further coverage for patents after November 2014.
There seems to be enough of what has been going on for current near-future products that would fall in that limitation, so perhaps Zen and some of its successors could get a few of the advances AMD has not adopted so far. The agreement's relevance going forward, and with it the AMD x86 lineage, appears to decrease with the passage of time.
Development pipelines are long, and patents tend to precede products for a fair while, so this isn't an immediate threat. However, the rumors about an exploration of a split or spin-off at some point in the future inspire a certain amount of inference.

 

[ninelven]

for AMD to be bought out the debt would have to be part of the deal too, which is why its unlikely.

The debt isn't that bad, especially for a company like Microsoft. Total cost for controlling share + debt - cash on hand would be ~2 - 2.5 billion.

According to the cross licensing agreement, AMD will lose the x86 license while Intel will keep the x64 license which will make the CPU division of AMD useless

I'm sure Intel would certainly find themselves more generous in negotiations because, if AMD (or whoever buys them) stops producing x86 chips, they really are a monopoly. I expect they would be highly motivated to maintain a facade of competition, regardless of their posturing now.

 

[Alexko]

for AMD to be bought out the debt would have to be part of the deal too, which is why its unlikely. According to the cross licensing agreement, AMD will lose the x86 license while Intel will keep the x64 license which will make the CPU division of AMD useless;

http://www.sec.gov/Archives/edgar/data/2488/000119312509236705/dex102.htm

All that will be left form the AMD buyout will be ARM processors and GPU's. Consoles will get scratched off the list because of the termination of the x86 license.

If AMD files for bankruptcy the same situation occurs without the penalty of bailing out the debt, which is more advantageous then a buyout right now which will increase risk greatly.

I may not be reading it right, but as far as I can tell, the agreement does not say this.