Advanced Micro Devices, Inc.
conference date: January 20, 2011 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2010 (fourth quarter)
Overview: Basically flat revenue, waiting for new Fusion processors to move forward, but well into the black (profitable).
Basic data (GAAP):
Revenue was $1.65 billion, up 2% sequentially from $1.62 billion, and flat from $1.65 billion in the year-earlier quarter.
Net income was $375 million, up sequentially from negative $118 million but down from $1.18 billion year earlier due to the one-time Intel payment.
EPS (earnings per share) were $0.50, up sequentially from negative $0.17, but down from $1.52 year-earlier.
Q1 2011 revenue expected in the flat to slightly down range. [normally would be seasonally down]. $650 million operating expenses including $12 million severance payment for Dirk Meyer, and an extra week.
Non-GAAP numbers: Operating income $141 million. Net income $106 million, down 2% sequentially from $108 million but up 32% from $80 million year earlier. EPS $0.14, down sequentially from $0.15 but up from $0.11 year-earlier.
The difference between GAAP and non-GAAP numbers resulted from a pre-tax gain of $283 million related to a legal settlement ($236 million net taxes) related to intellectual property.
Thomas Seifert, interim CEO, led the conference. Customers are excited about Fusion APUs. Bulldozer core is now available. Brazos APU shipped over 1 million units in the quarter to OEMs, and notebooks based around it won awards. Brazos has also won design wins in tablets and set top boxes.
32nm sampling of Bulldozer has begun. Production shipments in summer.
Starting this Q1, GlobalFoundries accounting will change because AMD now only owns 14%. A value analysis of GlobalFoundries will be completed in Q1. Their profits or losses will not appear either on the balance sheet or Profit and Loss of AMD.
Searching for a new, permanent CEO.
ASPs (average selling prices) for microprocessors were lower, leading to a gross margin of 45%, down 1% sequentially. ASP drops were concentrated in notebook and server segments.
Cash ended at $1.79 billion. $11 million adjusted free cash flow.
Graphics chip revenue of $424 million was up 9% sequentially, but flat y/y. Game console revenue was seasonally strong. revenue.
Computer segment revenue $1.22 billion.
New products could lead to higher gross margins.
Q1 guidance, includes extra week? Still better than seasonal. Range could be 0 to minus 4%. There is the extra week, but AMD is seeing higher than usual demand.
Llano? Sampling in high volume now, customers should ship products in Q2.
New points of opportunity? In near term, there will be little difference. This year is about Fusion products. Focus will stay on execution, but will accelerate the pace on related opportunities. "We are now an IP generating company."
Increase in operating expense, beyond Meyer payment and extra week? Really flattish with the corrections mentioned. We are managing op ex in a very disciplined way.
Margins in Q1? There is opportunity in Fusion launch, but 32nm launch costs will about cancel that out.
PC growth assumption for 2011? 10 to 11% range.
Market share in discrete GPUs? New, second generation, launch was exciting and helped revenue growth. We had robust design wins for 2011 platforms.
Intel's cap ex expansion announcement? We are supported by an ecosystem that is investing even more than Intel is in 2011.
Tablet cannibalization of PC segment? Our OEM partners don't see a deterioration of the notebook market. Any cannibalization should be built into our growth assumptions.
Dirk Meyer decision was forward looking, not based on a look backwards.
CPU segment revenues were flattish. Pricing environment looking forward is expected to be flattish, but new products may improve margins.
Supply side is good; we have no shortages at this time.
Since we were not in the netbook market, any netbooks with Fusion would be taking market share.
Market share gains, if any, from Fusion would be stacked towards the second half of the year.
Server segment weakness? We were disappointed with the server segment in Q4. We see room for improvement. We believe our product portfolio is good, but we need to work on taking the products to market.
So far GPU attach rates for 2011 are similar to what they were in 2010.
ASPs for CPUs cause? Just a mix change.
Sandy Bridge competition? We are confident we will gain significant market share as we ramp. At CES we saw the superiority of the AMD products. Llano will have much higher performance than what you will see from our competition (Intel).
ARM thoughts for AMD? We will embrace any changes that happen in our ecosystem, but we have a major advantage in 8086 expertise.
Q4 server segment was down sequentially. For Q1 2011 "we have higher ambitions."
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