ATI Q4 earnings... when?

[Natoma]

Well, the stock has already hit its 2 year low, and will probably lose another 5% tomorrow once markets open. I'd call that a discount considering it was trading as high as $40 not too long ago.

With R600 coming in a few weeks and the 2H'07 bringing, hopefully, some competitive products out of AMDs lineup, this is definitely a discount.

 

[Voltron]

I wouldn't think so. I'm not there yet tho (listening to the call replay now). Did they describe it as a "quarter" worth? I'm wondering if they charged off some RD that ATI had previously decided to spread out. Like maybe spread out over the life of the expected royalties of XB and Wii? That's a WAG tho. Haven't heard it yet.

Not to seem snide. But it is. Not that it matters because it's boring, but to clarify...

It is called in-process R&D, which is referenced in the press release. If a company buys another company in cash or a combination of cash and stock, and the purchase price is greater than book value (which is almost always the case) there is going to be an imbalance in the double entry accounting system ( i can go into details of why if you like). So to balance the book, the difference is put in a line item called Goodwill. Goodwill is economically meaningless because company's economic frequently have little to do with book value, particularly if earnings are growing quickly ( see Google). Up until 5 years ago, under U.S. GAAP, companies would have to amortize the Goodwill over 40 years in their income statements. Because it was a menaingless balance sheet item in the first place, analysts would exclude these charges from their earnings estimates. There was a loophole that allowed companies to write down the present value of future cash flows from R&D that had occured. This allowed primarily tech companies to take one time charges rather than amortize them over time, and it simplified on the accounting front. COmpanies still have to add Goodwill to the balance sheet, but no longer have to amortize the goodwill. It is just a meaningless item that stays on the balance sheet for years, unless the acquisition is a complete economic disaster, in which case more writedwons are required. BUt companies that can still take the in-process R&D writedown to avoid an chance of writedowns later and to simplify the balance sheet.

 

[Voltron]

There are a few things to note in the earnings report which might interetst those looking for sparse ATI tidbits. And AMD for that matter

For one, headcount at AMD increased by 4,854 people between Oct. 1 and Dec. 31. And weren't there even a few layoffs in there. 5,000ish productively employed ATI employees is maybe more than they were letting on. But I believe Wavey might have intimated the number was so high in a post a while back for whatever reason.

Margins. This is a back of the envelope calculation, but probably fairly reasonable. ATI's last public earnings release was during the May quarter, which included one month of Bitboys. Operating expenses (non GAAP) during that quarter were about $153. Adding in a full quarter of Bitboys and looking for a round number we could just say that ATI has about $155 million in operating expenses. ATI was part of AMD for a little more than 2/3 of the quarter, so lets say 70% of $155 million in opex. This gives us $108.5 mill, but lets round to $110 for some old fashion conservatism. Adding that back to the $13 million non GAAP operating loss for ATI in the quarter gives us gross profits of $97 million. Divided by revenues of $398 million gives an operating margin of 24.4%. Ouch. But realistically (we can finally admit it maybe), other than off coattails of R300 success and NV failure, in ranges of ATI's historical 25% to 30% margins.

AMD stand-alone gross margins. AMD non GAAP gross profits of $705 mill minus ATIs estimated (judiciously by me) $97 mill gives $608 mill in AMD gross profits. This gives a grosss margin on $1374 mill in AMD stand-alone revenues of 44%. Also ouch.

 

[Geo]

Transcript is up: http://seekingalpha.com/article/24929

 

[Geeforcer]

Is it me or are they being somewhat koy about the particulars of AMD/ATI numbers split?

 

[Geo]

Compared to who? Can you give me a breakdown of electricity usage cost in your household by occupant? This stuff isn't necessarily easy, particularly when you've integrated a great many functions over a short period of time.

They have promised a new reporting structure for 1Q results, with a "Graphics" group as one of them, so let's see what kind of granularity we see from them in April.

I found it interesting that they're expecting another $120M of acquistion costs during 1Q.

 

[Dave Baumann]

They have promised a new reporting structure for 1Q results, with a "Graphics" group as one of them, so let's see what kind of granularity we see from them in April.

I don't think that will be like-for-like either, as chipset sounds to be rolled up into CPU/platform.

 

[Simon82]

I don't think that will be like-for-like either, as chipset sounds to be rolled up into CPU/platform.

OT
I think green will be ok for you. Maybe not exotic like red but what's the matter. :smile:
/OT

 

[Geo]

I don't think that will be like-for-like either, as chipset sounds to be rolled up into CPU/platform.

No, I don't think we'll see like-for-like again, actually. Granularity might get a bit better as they settle in to the new catagories tho. Like being able to talk about margins, for instance, for each of the three divisions.

 

[Voltron]

By law the must report operating income and revenues (so hence implicit opertating margin) for each business segment in SEC filings. But there is no requirement to show co of good sold or operating expenses on a per segment basis. So it is unlikely that in actuality there will be any more disclosure in the future than there was this quarter.

But all of this mumbo jumbo obscures the bigger question, which is how is AMD going to find its way of the mountain of debt it has, particularly since marketpalce dynamics don't look especially favorable.

 

[Razor1]

Time will tell, AMD isn't in the greatest of positions but they aren't in a position that they can't come out of either. AMD does have some segments where it will see revenue growth soon, laptops, graphics (I don't really see them getting less then ATi did as of late).

If AMD can come out of this, they will be in a very good position to take on Intel head on.

The Sun deal with Intel worries me though, I remember AMD saying that even 1% of the business server industry is like 500 million? Thats a huge chunk of change when we look at AMD's financials.