Today AMD has announced their third quarter earnings for fiscal year 2015. AMD saw a 13% increase in revenue over Q2 2015, but revenues were down almost 26% over their Q3 2014 numbers. Revenue for the quarter was $1.06 billion USD, down from $1.43 billion a year ago. AMD continues to use GAAP and Non-GAAP earnings to help show the state of the business in greater detail. On a GAAP basis, AMD had an operating loss of $158 million for the quarter, and a $197 million net loss, which works out to $0.25 per share. Compared to last quarter, both losses were larger despite the increased revenue, and the numbers are down significantly over the $17 million net income a year ago.

AMD Q3 2015 Financial Results (GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue $1.06B $942M $1.43B
Gross Margin 23% 25% 35%
Operating Income -$158M -$137M $63M
Net Income -$197M -$181M $17M
Earnings Per Share -$0.25 -$0.23 $0.02

On a Non-GAAP basis, AMD had a $97 million operating loss, which is once again a larger loss than last quarter, and down 211% from the $87 million in operating income last year. Net loss was $136 million, or $0.17 per share, compared to a $41 million net profit and $0.05 per share last year. GAAP to Non-GAAP differences are due to $48 million in restructuring fees and $13 million in stock based compensation.

AMD Q3 2015 Financial Results (Non-GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue $1.06B $942M $1.43B
Gross Margin 23% 28% 35%
Operating Income -$97M -$87M $87M
Net Income -$136M -$131M $41M
Earnings Per Share -$0.17 -$0.17 $0.05

The Computing and Graphics segment continues to struggle, although AMD did see stronger sequential growth here with the recent launch of Carrizo. Revenue increased 12% over last quarter, although it is still down 46% year-over-year. This segment had an operating loss of $181 million for the quarter, up from a loss of $147 million last quarter and a loss of $17 million a year ago. Sequentially, the loss is mostly attributed to a write-down of $65 million which AMD is taking on older-generation products. Annually, the decrease is due to lower overall sales. Unlike Intel, AMD processors had a decrease in Average Selling Price (ASP) both sequentially and year-over-year, so there was no help there from the lower sales volume. The GPU ASP was a different story, staying flat sequentially and increasing year-over-year. Recent launches of new AMD graphics cards have helped here.

AMD Q3 2015 Computing and Graphics
  Q3'2015 Q2'2015 Q3'2014
Revenue $424M $379M $781M
Operating Income -$181M -$147M -$17M

The Enterprise, Embedded, and Semi-Custom segment had a better showing. Revenue increased 13% over last quarter, and was down only 2% year-over-year. Semi-custom sales (read Consoles) drove the sequential increase but lower embedded and server processor sales caused a year-over-year decline. Operating income for this segment came in at $84 million, up from $27 million in Q2 but down from $108 million in Q3 2014. Q2’s numbers were skewed though by a $33 million hit on moving to a new process node.

AMD Q3 2015 Enterprise, Embedded and Semi-Custom
  Q3'2015 Q2'2015 Q3'2014
Revenue $637M $563M $648M
Operating Income $84M $27M $108M

All Other had an operating loss of $61 million for the quarter, up from $17 million loss in Q2 and a $28 million loss in Q3 2014. This is where they stick their “restructuring charges” and they nicely align with the GAAP vs Non-GAAP values.

The bad news doesn’t stop here either. We’ve seen the departure of a couple of key people at AMD, and AMD is also spinning off some of the company. Revenues for Q4 are expected to decrease an additional 10%, plus or minus 3%, compared to today’s numbers. AMD is doing more corporate restructuring in an attempt to reduce expenses further. Perhaps the most troubling aspect of today’s results is their gross margin is only 23%. They really need closer to 35% for profitability and are a long way from that today.

Source: AMD Investor Relations

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  • Da W - Friday, October 16, 2015 - link

    AMD only worth $1,5B. It's intel's / microsfot / apple poket change for a quarter.
    Intel can't buy them because their X86 licence terms from the 80s prevent them to. There must always be 2 x86 companies, until one dies. Nobody else wants to buy them, cause everybody thinks PC is dead.
  • eanazag - Friday, October 16, 2015 - link

    Intel could buy the graphics division.
  • eanazag - Friday, October 16, 2015 - link

    I think someone would buy them out, but they haven't bottomed out to where it would make sense. I think potentials buyers are waiting for a bankruptcy filing.

    I'd be interested to see what the CPU and GPU dollars look like separately. Basically we know the CPU division is not profitable, but the GPU may or may not be. If I had to guess I would say the GPU business was profitable, but not in the same way Nvidia is. I would guess the CPU is really dragging down the GPU business numbers.

    Simply put, AMD effed up when quitting the attempt for x86 competitiveness with no real thing to fall back on. I agree with JTaylor below. I think AMD's businesses will continue on in some fashion, but I'm not sure it will with the AMD name.
  • Shadow7037932 - Monday, October 19, 2015 - link

    Speaking of GPUs, I can see someone (Apple, Qualcomm, Samsung, other) buying the GPU division for the IPs alone. Similar to what Google did with Motorola a few years ago.
  • jjj - Thursday, October 15, 2015 - link

    lol you really need to get more of a clue. This is the first time in many quarters when it's not bad, yet you think it's bad and worse news.
    On quarter they had solid growth in both segments. (and btw the Intel ASP numbers are distorted by the way they accounted for contra revenue - they had negative revenue on tablets while in Q3 a combination of lower tabs volumes and lower% of tabs receiving contra revenue distorted the revenue and ASP).
    Margins for AMD were 23% but the inventory write-down impact was 6% so excluding that they were at 29%, up from 25% in Q2 and as expected.
    It's their first quarter in years with mildly good news.
    They have 3 more quarters to go and then in the second half of 2016 we'll see what new custom designs they got and what Zen can do. For now Q3 and Q4 are ok and that JV gets them a bit more cash for the short term.
  • Flunk - Thursday, October 15, 2015 - link

    If Zen launches in 2016 it will be a miracle and probably also really late in the year.
  • IBleedOrange - Thursday, October 15, 2015 - link

    I don't see how anyone can see this as good news. Q2->Q3 uptick in topline revenue is good but it doesn't change the fact that it's down 46% YoY and they are continuing to lose more money (net revenue/operating income is more important than topline revenue), ASP's are going down, and their market share is shrinking. I mean, they are selling off parts of the business to raise cash and losing key talent.

    We all want to see a competitive, healthy AMD and watch Zen return them to profitably, but don't fool yourself that this is "Good News" in some way. At best, it's "Not Horribly Bad News"
  • Azethoth - Thursday, October 15, 2015 - link

    I think the bottom line is we have had the PC -> mobile form factor transition. AMD did not make it and worse, is failing at their old business. Intel probably will not make the transition either. At any rate, Intel competition is no longer AMD, it is ARM licensees. Intel though can still choose to make ARM chips. AMD is just going to fail and the only part anyone gives a damn about, ATI, will be purchased by someone during bankruptcy.
  • Duckeenie - Thursday, October 15, 2015 - link

    A reduction in revenues by 26% compared to this quarter in the previous year doesn't seem like ANY kind of good news to me.

    Now that your services are no longer required as an investment banker have you considered a job in politics? You appear to have quite a talent for spin. :P
  • mdriftmeyer - Friday, October 16, 2015 - link

    Keep ignoring the Q2->Q3 numbers. This new infusion will only make them healthier now that that backend is moved to their partner's bottom line.

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