The Earnings Report

Advanced Micro Devices [NYSE: AMD] finally released their second quarter earnings report for the fiscal 2017 year. They reported a revenue of $1.22 billion, an operating income of $25 million, and a net loss of $16 million – translating to roughly $(0.02) per share.

Looking at the chart they provided we can compare these statistics to the previous quarter and last year’s results.

GAAP Financial Results
Q2-17 Q1-17 Q2-16
Revenue $1.22B $984M $1.03B
Operating income (loss) $25M $(29)M $(8)M
Net income (loss) $(16)M $(73)M $69M
Earnings (loss) per share $(0.02) $(0.08) $0.08

So AMD is up roughly 19% from last year’s results and up 24% from last quarter. They also were able to bring in an operating income instead of a loss this quarter as compared to the previous quarter and last year but their earnings per share was down from last year quite heavily; $0.08 to $(0.02). They made a net loss this quarter and while they were up sequentially, they were down heavily YoY, nearly -123%.

Revenue Breakdown by Segment
  • Computing and Graphics
    • Revenue: $659 million
      • Up 51% YoY
      • Operating Income: $7 million
        • Up 108% YoY from $(81) million
      • Noteworthy Statements:
        • Average selling price increased significantly across the board.
  • Enterprise, Embedded, and Semi-Custom
    • Revenue: $563 million
      • Down 5% YoY
      • Operating Income: $42 million
        • Down -50% YoY from $84 million
      • Noteworthy Statements:
        • YoY decrease primarily due to “lower revenue and higher datacenter related R&D investments.”
  • All Other
    • Operating loss: $(24) million
      • Down 118% YoY from $(11) million
    • The heavy drop in operating loss YoY was due primarily to stock-based compensation charges and a $7 million restructuring credit on Q2 2016.

How Did They Do?

They did decent to be completely fair. I wasn’t expecting too much from this quarter due to the weak guidance given last quarter and thus firmly expected they would either miss earnings or just match expectations. However, to my pleasant surprise, they exceeded revenue expectations by a slender amount and did well overall from a simplistic viewpoint. However, their margins were still rough at 33% and their net loss this year was particularly awful – especially when viewed YoY.

A few other things that confused me across their earnings report and the respective conference call was the lack of dialogue on how Ryzen is selling. They were more than eager to discuss Vega’s unit shipments and whatnot, but were keen to avoid saying similar about Ryzen.

“In Graphics, GPU revenue increased by a strong double-digit percentage from year ago, with higher unit shipments and ASPs driving growth across our desktop and mobile GPU products. Demand for Radeon RX GPUs was strong in the quarter, driven by gaming and cryptocurrency mining.”

The above text in bold shows the direct statement that GPU sales are experience higher unit shipments in completely clarity. In the same conference however, they avoid saying the same about Ryzen.

“…strong sell-through of our Ryzen CPUs in the first full quarter of sales. Our Ryzen family of processors drove a richer mix of shipments and client ASPs improved significantly from a year ago.”

They say they’ve achieved a stronger sell-through of the Ryzen CPU but that simply means that the ones they shipped got sold, not that unit shipments were going up, though it can certainly be implied. But the question arises why they wouldn’t simply state it outright like they did with the GPU sales. However, this is all blind speculation and I admit that it’s got little tenability and isn’t worth too much thought. More a strange feeling that anything truly ground-shaking, as much as some people make it out to be.

Another sad point to note is their abysmal free cash flow still holds true. The fact that this company still can’t generate any free cash is a harrowing prospect and I’d hope to see that change sooner rather than later.

Overall, I’d say the results were promising but only just.


Image courtesy of VirtualWorld.com

Disclaimer

I do not own any shares of AMD nor do I plan on opening any positions in the near future. What is written here is solely my own opinion and I am receiving no compensation other than what I may receive from TickHounds.