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AMD remains bullish amid large operating losses

Posted: 22 Jan 2015     Print Version  Bookmark and Share

Keywords:Advanced Micro Devices  processor  GPU  server  ARM 

In spite of being in the red on its latest quarterly financial update, Advanced Micro Devices (AMD) remains optimistic for 2015. The company reported 4Q14 revenue at $1.24 billion with an operating loss of $330 million and net loss $0.47 per share. YoY revenue climbed for the first time since 2011, growing four per cent to $5.51 billion, while operating losses in 2014 reached $155 million. The company saw double digit declines in several segments, but CEO Lisa Su expects income to stabilise in 2015.

"We have right-sized our investments and taken actions to reduce downstream inventory in Q4," Su said. "I am optimistic about our long term opportunities but realistic about the short term challenges."

AMD faces the challenge of improving its computing and graphics business, which decreased 15 per cent from Q3 and 16 per cent from 2013. AMD officials attributed the decrease to lower desktop processor, chipset and GPU sales, which resulted in a $56 million operating loss in 2014. Interim CFO Devinder Kumar said the YoY losses were due to "lower channel sales partially offset by lower operating expenses."

"I do believe we will save [the computing and graphics] business. Strong product launches are key to our 2H15 performance," Su said, adding that battery life and performance in AMD's 28nm products will drive success.

AMD's enterprise, embedded and semi-custom segment showed an annual increase but quarterly loss following major shipments to the likes of Sony and Microsoft for Christmas-time game console purchases. Operating income in Q4 was $109 million following an 11 per cent drop in sales of semi-custom SoCs; annual revenue increased 51 per cent. Embedded processor units increased for the third quarter in a row.

Su told investors and analysts that she expects AMD's embedded business to grow in 2015, partially aided by the introduction of its next-generation x86 processor, Carizzo. The CEO, who marked her 100 days in office during the financial call, said she also expects semi-custom units to increase in the third year of gaming console ramp-up.

Kumar said AMD's lack of success in the server market is "no secret," though the company hopes to add value to a server ecosystem that will remain x86-based for some time. In a release, AMD highlighted its progress in developing the ecosystem for both 64bit ARM-based servers and x86-based servers.

As AMD gets out of what one analyst called "perennial restructuring mode," Kumar said he expects revenue to decrease by 15 per cent in 1Q15. AMD is "actively designing a number of products" with 14nm technology, she said.

- Jessica Lipsky
  EE Times

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