More like this

Business

Arrow

The Channel

Pray for AMD

It's always darkest before it goes pitch black

We were warned, but AMD's second-quarter results were still a shocking bloodbath, with revenue that missed analysts' estimates and came in even lower than the chipmaker's own revised guidance.

Last week, we were cautioned to expect AMD's revenue for the period ending on June 27 to be down 8 per cent sequentially, contrary to earlier guidance that it would be flat. The actually figure was $942m, an 8.5 per cent sequential decline and a vertiginous 34.6 per cent drop from the same period a year ago.

Not surprisingly, the company's net loss widened once again. A year ago, its quarterly loss was $36m. In this year's Q1 it lost $180m. This quarter, Q2, it managed to lose $181m, which was 403 per cent worse than last year's quarter.

If there was a bright spot for AMD, however, it only lost $0.17 per diluted share, which was in line with Wall Street's estimates. These days, that counts as a victory.

We don't need to tell you what went wrong these past three months. The PC market is still in the dumps, and AMD isn't even the leading chip supplier. Factor in that AMD experienced "lower than expected consumer demand" in the quarter – we reckon CEO Lisa Su hasn't been reading The Reg lately – and you can guess what happened.

Only you might not have thought it would be quite this bad. AMD's Computing and Graphics division reported revenue of $379m, which was down 54.2 per cent, year-on-year. Its operating loss was $147m, compared to a $6m operating loss for last year's quarter. We'll do the math for you: That's 2,350 per cent deeper into the red.

At least the Enterprise, Embedded, and Semi-Custom chips segment is still making money, mostly from sales of semi-custom system-on-chips (SoCs). The division's revenue for Q2 was $563m, which was down 8.2 per cent annually, but it still managed to eke out an operating profit of $27m. Unfortunately, that was a 72.2 per cent smaller operating profit than in Q2 of last year and a 40 per cent decline sequentially.

Pray for mojo AMD

So what's next for AMD? Well, we know it's not going to splinter into different parts. Instead, some belt-tightening may be in the offing. The chipmaker's workforce is already 8 per cent smaller than it was a year ago, and we wouldn't be surprised to see it shrink further.

But hope springs eternal for AMD's chief exec. In a conference call with financial analysts on Thursday, Su said she expects sales of the company's "Carrizo" SoCs for notebooks, which haven't been shifting very much lately, will pick up once Windows 10 ships at the end of the month.

Su has also brought in a new fall guy boss to run AMD's tattered Computing and Graphics business in the form of Jim Anderson, an exec that she poached from Intel at the beginning of June. Among other things, he presided over Intel's $650m purchase of the Axxia network processor business from Avago.

"Jim began his career as a processor architect and has held several leadership, business management, and engineering roles across multiple tech companies," Su said. "He is the ideal leader to return CG to a positive trajectory as we focus on stabilizing the business and then re-gaining profitable share."

We'll believe that one when we see it. ®

Sponsored: Magic quadrant for enterprise mobility management suites