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AMD Reports First Quarter Results

SUNNYVALE, CA -- (Marketwire) -- 04/19/12 -- AMD (NYSE: AMD)

Q1 2012 Results

  • AMD revenue $1.59 billion, 6 percent sequential decrease and a 2 percent decrease year-over-year
  • Net loss $590 million, loss per share $0.80, operating loss $580 million
  • Non-GAAP(1) net income $92 million, earnings per share $0.12, operating income $138 million
  • Gross margin 2 percent, non-GAAP gross margin 46 percent

AMD (NYSE: AMD) today announced revenue for the first quarter of 2012 of $1.59 billion, net loss of $590 million, or $0.80 per share, and operating loss of $580 million. The company reported non-GAAP net income of $92 million, or $0.12 per share, and non-GAAP operating income of $138 million. First quarter non-GAAP net income excludes: the previously disclosed charge of $703 million for a limited waiver of exclusivity of certain 28 nanometer (nm) APU products from GLOBALFOUNDRIES Inc. (GF) related to the 2012 Amendment to the Wafer Supply Agreement; amortization of acquired intangible assets of $1 million; a restructuring charge of $8 million; SeaMicro, Inc. (SeaMicro) acquisition costs of $6 million, and a tax benefit related to the SeaMicro acquisition of $36 million.

"AMD delivered solid results in the first quarter as we remain focused on improving our execution, delivering innovative products, and building a company around a strategy to deliver strong cash flow and earnings growth," said Rory Read, AMD president and CEO. "A complete top-to-bottom introduction of new APU offerings, combined with ample product supply resulting from continued progress with our manufacturing partners, positions us to win and grow."

GAAP Financial Results

                                  Q1-12           Q4-11           Q1-11
Revenue                           $1.59B          $1.69B          $1.61B
Operating income (loss)          $(580)M           $71M            $54M
Net income (loss) / Earnings
 (loss) per share            $(590)M/$(0.80) $(177)M/$(0.24)   $510M/$0.68

Non-GAAP Financial Results(1)

                                       Q1-12         Q4-11         Q1-11
Revenue                                $1.59B        $1.69B        $1.61B
Operating income                       $138M         $172M          $92M
Net income / Earnings per share      $92M/$0.12   $138M/$0.19    $56M/$0.08

Quarterly Summary

  • Gross margin was 2 percent due to the previously disclosed charge of $703 million for a limited waiver of exclusivity for certain 28nm APU products from GF.
    • Non-GAAP gross margin was 46 percent, flat sequentially.
  • Cash, cash equivalents and marketable securities balance, including long-term marketable securities, was $1.71 billion at the end of the quarter.
    • Cash payments in the quarter included $281 million related to the SeaMicro acquisition and $150 million related to the limited waiver of exclusivity of certain 28nm APU products from GF.
  • AMD's first quarter of 2011 had 14 weeks of business compared to 13 weeks for the first quarter of 2012.
  • Computing Solutions segment revenue decreased eight percent sequentially and was flat year-over-year. The sequential decrease was driven by seasonally lower sales in the Client business.
    • Operating income was $124 million, compared with $165 million in Q411 and $100 million in Q111.
    • Microprocessor ASP decreased sequentially and was flat year-over-year.
    • AMD announced and began shipping the follow-on to its essential notebook platform "Brazos," its bestselling platform ever. The new essential notebook platform, codenamed "Brazos 2.0," delivers improved performance, extended battery life and many new features. Systems based on "Brazos 2.0" are expected to be available in the second quarter.
    • AMD ramped volume production of its second generation A-Series APU, codenamed "Trinity," in anticipation of global notebook availability from leading OEMs in the second quarter. "Trinity" delivers twice the performance-per-watt compared with AMD's current generation A-Series APU. Systems powered by "Trinity" will enable outstanding entertainment and gaming performance with superior battery life.
    • Dell, Tyan, MSI and Fujitsu are among the partners that introduced systems based on AMD Opteron™ 3200 processors targeting hosting customers who require enterprise-class reliability at desktop-class price points. The new server platform delivers price-performance and power-per-core advantages compared to competitive offerings.
    • Telus, a leading Canadian Telecommunications provider, selected the AMD Opteron 6200 Series processors to power its latest offering, the TELUS AgilIT Virtual Private Cloud.
    • AMD announced two new heterogeneous computing milestones, both with the objective of enhancing the user experience and nurturing future software development. AMD announced an investment through AMD Ventures in Nuvixa, Inc., a developer of gesture-based video communication and presentation solutions, and the first AMD Fusion Center of Innovation was established at the University of Illinois at Urbana-Champaign.
  • Graphics segment revenue was flat sequentially and decreased 7 percent year-over-year. GPU revenue was up in a seasonally down quarter, due to higher improved desktop GPU ASP in the channel, offset by seasonally lower game console royalty revenue. The year-over-year decrease was primarily driven by lower demand for desktop and mobile graphics.
    • Operating income was $34 million, compared with $27 million in Q411 and $19 million in Q111.
    • GPU ASP was flat sequentially and increased year-over-year.
    • AMD reached a major milestone with worldwide availability of its full line of next generation 28nm AMD Radeon™ HD 7000 Series desktop GPUs in less than three months. In addition to the AMD Radeon HD 7950 Series GPU, AMD introduced the first graphics card to break the 1 GHz barrier, the AMD Radeon HD 7770 GPU. AMD also launched the AMD Radeon HD 7800 Series GPU featuring 2GB of GDDR5 memory for serious gamers.
  • Corporate
    • AMD announced an amended Wafer Supply Agreement with GF that established a negotiated wafer pricing based on a take or pay arrangement in 2012 and established a framework for wafer pricing in 2013. AMD transferred its remaining ownership interest in GF to GF and GF waived the exclusivity arrangement for AMD to manufacture certain 28nm APU products at GF for a specified period.
    • AMD acquired SeaMicro, Inc., a pioneer in energy-efficient, high-bandwidth microservers. The acquisition accelerates the company's strategy to deliver disruptive server technology and positions AMD to expand its current server offerings to provide customers and partners with low-power, low-cost, high-bandwidth server solutions.

Current Outlook

AMD's outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Cautionary Statement" below.

AMD expects revenue to increase 3 percent, plus or minus 3 percent, sequentially for the second quarter of 2012.

For additional detail regarding AMD's results and outlook please see the CFO commentary posted at

AMD Teleconference

AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its first quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at AMD. The webcast will be available for 10 days after the conference call.

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (1)

(Millions except per share
 amounts)                            Q1-12          Q4-11          Q1-11
GAAP net income (loss) /
 Earnings (loss) per share      $(590) $(0.80) $(177) $(0.24) $ 510  $ 0.68
  Limited waiver of exclusivity
   from GLOBALFOUNDRIES          (703)  (0.94)     -       -      -       -
  Impairment of investment in
   GLOBALFOUNDRIES                  -       -   (209)  (0.28)     -       -
  Dilution gain in investee,
   net                              -       -      -       -    492    0.66
  Payment to GLOBALFOUNDRIES        -       -      -       -    (24)  (0.03)
  Amortization of acquired
   intangible assets               (1)      -     (3)      -     (9)  (0.01)
  Legal settlement                  -       -      -       -     (5)  (0.01)
  Loss on debt repurchase           -       -     (1)      -      -       -
  Restructuring charges, net       (8)  (0.01)   (98)  (0.13)     -       -
  Loss from discontinued
   operations*                      -       -     (4)  (0.01)     -       -
  SeaMicro acquisition costs       (6)  (0.01)     -       -      -       -
  Tax benefit related to
   SeaMicro acquisition            36    0.05      -       -      -       -
Non-GAAP net income / Earnings
 per share                      $  92  $ 0.12  $ 138  $ 0.19  $  56  $ 0.08

* Loss on discontinued operations consists of charges related to the sale of our DTV division to Broadcom which occurred in 2008.

Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income (1)

(Millions)                                            Q1-12   Q4-11   Q1-11
GAAP operating income (loss)                         $ (580) $   71  $   54
  Limited waiver of exclusivity from GLOBALFOUNDRIES   (703)      -       -
  Payment to GLOBALFOUNDRIES                              -       -     (24)
  Amortization of acquired intangible assets             (1)     (3)     (9)
  Legal settlement                                        -       -      (5)
  Restructuring charges, net                             (8)    (98)      -
  SeaMicro acquisition costs                             (6)      -       -
Non-GAAP operating income                            $  138  $  172  $   92

Reconciliation of GAAP to Non-GAAP Gross Margin (1)

(Millions except percentages)                            Q1-12  Q4-11  Q1-11
GAAP Gross Margin                                       $  27  $ 773  $ 691
GAAP Gross Margin %                                         2%    46%    43%
  Limited waiver of exclusivity from GLOBALFOUNDRIES     (703)     -      -
  Payment to GLOBALFOUNDRIES                                -      -    (24)
  Legal settlements                                         -      -     (5)
Non-GAAP Gross Margin                                   $ 730  $ 773  $ 720
Non-GAAP Gross Margin %                                    46%    46%    45%

About AMD
AMD (NYSE: AMD) is a semiconductor design innovator leading the next era of vivid digital experiences with its groundbreaking AMD Fusion Accelerated Processing Units (APUs) that power a wide range of computing devices. AMD's server computing products are focused on driving industry-leading cloud computing and virtualization environments. AMD's superior graphics technologies are found in a variety of solutions ranging from game consoles, PCs to supercomputers. For more information, visit

Cautionary Statement

This document contains forward-looking statements concerning AMD, its second quarter of 2012 revenue, demand for the company's products, that the company will have sufficient supply of company's products to meet customer demand, its future growth, its ability to deliver sustained success, its strategy to deliver cash flow and earnings growth, its server strategy and growth opportunities, the anticipated benefits of from AMD's acquisition of SeaMicro, the timing of future products that incorporate the company's products, and the features of these new products which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates," "anticipates," "projects," "would," and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Risks include the possibility that Intel Corporation's pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities may negatively impact the company's current plans; the company may be unable to develop, launch and ramp new products and technologies in the volumes that are required by the market and at mature yields on a timely basis; that its third party wafer foundry suppliers will be unable to transition the company's products to advanced manufacturing process technologies in a timely and effective way or to manufacture the company's products on a timely basis in sufficient quantities and using competitive technologies; the company will be unable to obtain sufficient manufacturing capacity or components to meet demand for its products or will not fully utilize its projected manufacturing capacity needs at GF's microprocessor manufacturing facilities for 2012; that customers stop buying the company's products or materially reduce their operations or demand for the company's products; that the company may be unable to maintain the level of investment in research and development that is required to remain competitive; that there may be unexpected variations in market growth and demand for the company's products and technologies in light of the product mix that it may have available at any particular time or a decline in demand; the company will require additional funding and may be unable to raise sufficient capital on favorable terms, or at all; that global business and economic conditions will not continue to improve or will worsen; that demand for computers will be lower than currently expected; and the effect of political or economic instability, domestically or internationally, on our sales or supply chain. Investors are urged to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 31, 2011.

AMD, the AMD Arrow logo, AMD Opteron, AMD Radeon, and combinations thereof, and are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and used to identify companies and products and may be trademarks of their respective owner.

(1) In this press release, in addition to GAAP financial results, the Company has provided non-GAAP financial measures including non-GAAP net income, non-GAAP operating income, non-GAAP earnings per share and non-GAAP gross margin. These non-GAAP financial measures reflect certain adjustments as presented in the tables in this press release. The Company also provided Adjusted EBITDA and non-GAAP Adjusted free cash flow as supplemental measures of its performance. These items are defined in the footnotes to the selected corporate data tables provided at the end of this press release. The Company is providing these financial measures because it believes this non-GAAP presentation makes it easier for investors to compare its operating results for current and historical periods and also because the Company believes it assists investors in comparing the Company's performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance and for the other reasons described in the footnotes to the selected data tables. Refer to corresponding tables at the end of this press release for additional AMD data.

(Millions except per share amounts and percentages)

                                                     Quarter Ended
                                             Mar. 31,   Dec. 31,   Apr. 2,
                                               2012       2011       2011

                                            ---------  ---------  ---------

Net revenue                                 $   1,585  $   1,691  $   1,613

Cost of sales                                   1,558        918        922

                                            ---------  ---------  ---------

Gross margin                                       27        773        691

Gross margin %                                      2%        46%        43%

Research and development                          368        358        367

Marketing, general and administrative             230        243        261

Amortization of acquired intangible assets          1          3          9

Restructuring charges, net                          8         98          -

                                            ---------  ---------  ---------

Operating income (loss)                          (580)        71         54

Interest income                                     2          2          3
Interest expense                                  (43)       (43)       (48)
Other income (expense), net                        (1)      (207)        11

                                            ---------  ---------  ---------

Income before dilution gain in investee and
 income taxes                                    (622)      (177)        20

Provision (benefit) for income taxes              (32)        (4)         2

Dilution gain in investee, net                      -          -        492

                                            ---------  ---------  ---------

Income (loss) from continuing operations         (590)      (173)       510

Loss from discontinued operations, net of
 tax                                                -         (4)         -

                                            ---------  ---------  ---------

Net income (loss)                           $    (590) $    (177) $     510

                                            ---------  ---------  ---------

Net income (loss) per share
    Continuing operations                   $   (0.80) $   (0.24) $    0.71
    Discontinued operations                         -      (0.01)         -
                                            ---------  ---------  ---------
  Basic net income (loss) per share         $   (0.80) $   (0.24) $    0.71

    Continuing operations                   $   (0.80) $   (0.24) $    0.68
    Discontinued operations                         -      (0.01)         -
                                            ---------  ---------  ---------
  Diluted net income (loss) per share       $   (0.80) $   (0.24) $    0.68

                                            ---------  ---------  ---------

Shares used in per share calculation

  Basic                                           734        732        720

  Diluted                                         734        732        764

                                            ---------  ---------  ---------


                                                      Quarter Ended
                                             Mar. 31,   Dec. 31,    Apr. 2,
                                               2012       2011       2011

                                            ---------  ---------  ---------

Total comprehensive income (loss)           $    (593) $    (173) $     511
                                            ---------  ---------  ---------


                                                   -----------  -----------
                                                     Mar. 31,     Dec. 31,
                                                       2012         2011
                                                   -----------  -----------


Current assets:
  Cash, cash equivalents and marketable securities $     1,544  $     1,765
  Accounts receivable, net                                 962          919
  Inventories, net                                         585          476
  Prepaid expenses and other current assets                104           69

                                                   -----------  -----------

      Total current assets                               3,195        3,229

Long-term marketable securities                            169          149
Property, plant and equipment, net                         715          726
Investment in GLOBALFOUNDRIES                                -          278
Acquisition related intangible assets, net                 109            8
Goodwill                                                   553          323
Other assets                                               247          241

                                                   -----------  -----------

Total Assets                                       $     4,988  $     4,954
                                                   ===========  ===========

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                                 $       527  $       363
  Payable to GLOBALFOUNDRIES                               560          177
  Accrued liabilities                                      556          550
  Deferred income on shipments to distributors             137          123
  Current portion of long-term debt and capital
   lease obligations                                       490          489
  Other current liabilities                                 77           72

                                                   -----------  -----------

      Total current liabilities                          2,347        1,774

Long-term debt and capital lease obligations, less
 current portion                                         1,529        1,527
Other long-term liabilities                                 60           63

Stockholders' equity:

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