Analyst Conference Summary


conference date: April 21, 2009 @ 2:00 PM Pacific Time
for quarter ending: March 28, 2009 (1st quarter)

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Forward-looking statements

Overview: Still nowhere near profitability. Revenues stable at low level.

Note that because of the GlobalFoundries deal, the reported numbers may be confusing both in themselves and compared to past numbers.

Basic data (GAAP):

Revenue was $1.18 billion, up 1% sequentially from $1.16 billion but down 21% from the year-earlier quarter.

Net loss was $416 million, improving on a $1.42 billion loss in q4, but worse than the $351 million loss year-earlier.

EPS (earnings per share) was negative $0.66, improving sequentially from negative $2.34, but worse than the negative $0.60 year-earlier.


"Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be down for the second quarter of 2009."

Hope to approach the $1.3 billion break-even model in the 2nd quarter.

Full 2009 capital expenses expected at $150 million for AMD products and $760 million for GlobalFoundries.

Conference Highlights:

GlobalFoundries, Inc. results after March 2, 2009 are consolidated in the new Foundry reporting segment. AMD Products Company will refer to AMD less GlobalFoundries.

Microprocessor units and revenue grew sequentially as customers looked for maximum value. The quarter was marked by the launch of GlobalFoundries, ongoing restructuring, and new product introductions. Global inventory reductions seem to have leveled off. All major roadmap milestones for the quarter were met.

Non-GAAP net loss was $189 million with a non-GAAP operating loss of $124 million. Gross margin was 43%. There was a 5% benefit from sale of inventory that had been written down in Q4 2008.

Launches in quarter included the Yukon ultrathin notebook PC platform, the Dragon platform with Phenom II processors, and the ATI Radeon HD 4000 graphics chip series. Also notable were the ATI FirePro V7750 graphics processor for workstations and the AMD Fusion Render Cloud for streaming HD video.

6 core Istanbul Opteron processors are getting good feedback, with the shipping date moved forward to May and systems shipping in June.

For the AMD Product Company portion, non-GAAP net loss was $97 million. Gross margin for this was 40%, with 35% adjusted gross margin. Underutilization of manufacturing and lower price per unit lowe

Computing solutions revenue was $938 million, up 7% sequentially, with units up and prices down.

Graphics segment revenues were $222 million, down 18% sequentially with both units and ASPs down.

For Product Company, $1.6 billion cash and equivalents at end of quarter. Depreciation and amortization was $105 million, capital expenditures $17 million. Adjusted EBIDTA $99 million. $3.7 billion of long term debt was outstanding.


Gross margin clarity? In Q1 we worked at depleting inventory, as we did at the end of 2008. So utilization rate should improve, but more in Q3 than Q2. We are still selling 65nm, but most new parts are 45nm.

Pricing next quarter? We are working on our cost structure, we can't control the pricing.

Cash flow? We still hope to achieve positive cash flow for the year, with confidence the second half will be positive, but maybe not able to compensate for the first half of the year.

Does Q2 guidance mean you will lose share? Q2 is typically seasonally weak and we don't know what end demand will be. We do not intend to lose share.

How can you get a gross margin increase? The shift to 45nm will help reduce our costs. We also hope to improve the mix of what we sell.

Server market? The enterprise server market was not exciting in the quarter. We are not anticipating a turn around in that space in Q2.

Computing market space ASPs? On desktop side ASPs were flat to slightly up, in notebook side ASPs were down due to shift to lower cost machines. We also had too much notebook inventory going into the quarter. Server market was down a bit sequentially, which hurts the overall ASP.

Was your seasonal success due to any particular large transactions? No. It was across the board.

We don't see any reason to call a bottom already. We still see a great deal of uncertainty in the economy and in demand for computers.

How does Q2 look right now? Q2 is usually seasonally down from Q1, there is still some excess inventory, we don't know what end user demand is, so we are being cautious and saying that Q2 revenues will be potentially down.

Geographic? China and Middle East were stronger than the America/Europe average, Russia and Eastern Europe were weaker.

We feel very good about taking share in graphics processors going forward.

Foundry operations in Q2? It will be in a loss position for 2009 as it builds out to become a separate company and get new clients.

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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2009 William P. Meyers