Posted on Tuesday, October 24 2017 @ 22:36 CEST by Thomas De Maesschalck
On a non-GAAP basis, AMD posted net income of $110 million, or 10 cents per share. Revenue was $130 million higher than analyst estimates, while profit beat expectations by two cents.
For the current quarter, AMD expects revenue will be down 15 percent sequentially, plus or minus 3 percent. The midpoint of this guidance corresponds to a year-over-year increase of about 26 percent.
Investors are selling AMD on the news, the company's stock is currently down 6.67% to $13.30 in after-hours trading. The lukewarm fourth quarter guidance seems to be the culprit here, as well as the weak margins.
“Strong customer adoption of our new high-performance products drove significant revenue growth and improved financial results from a year ago,” said Dr. Lisa Su, AMD president and CEO. “Our third quarter new product introductions and financial execution mark another important milestone as we establish AMD as a premier growth company in the technology industry.”
Q3 2017 Results
Revenue was $1.64 billion, up 26 percent year-over-year, primarily driven by higher revenue in the Computing and Graphics segment (CG). Revenue was up 34 percent sequentially, driven by the Enterprise Embedded and Semi-Custom segment (EESC) revenue seasonality and higher revenue in CG. In the quarter, AMD closed a patent licensing transaction which positively impacted revenue in the segments.
On a GAAP basis, gross margin was 35 percent, up 30 percentage points year-over-year primarily due to a $340 million charge related to our GLOBALFOUNDRIES Wafer Supply Agreement (WSA) in the year ago period (WSA charge). In addition, the gross margin increase was primarily driven by the benefit from IP related revenue and a richer revenue mix from CG partially offset by costs associated with the WSA for certain wafers purchased at another foundry. Gross margin was up 2 percentage points sequentially primarily driven by the benefit from IP related revenue, partially offset by costs associated with the WSA for certain wafers purchased at another foundry. Operating income was $126 million compared to an operating loss of $293 million a year ago and operating income of $25 million in the prior quarter. Net income was $71 million compared to net losses of $406 million a year ago and $16 million in the prior quarter. Diluted earnings per share was $0.07 compared to losses per share of $0.50 a year ago and $0.02 in the prior quarter.
On a non-GAAP(1) basis, gross margin was 35 percent, up 4 percentage points year-over-year primarily driven by the benefit from IP related revenue and a richer revenue mix from CG, partially offset by costs associated with the WSA for certain wafers purchased at another foundry. Gross margin was up 2 percentage points sequentially primarily driven by the benefit from IP related revenue, partially offset by costs associated with the WSA for certain wafers purchased at another foundry. Operating income was $155 million compared to $70 million a year ago and $49 million in the prior quarter. Net income was $110 million compared to $27 million a year ago and $19 million in the prior quarter. Diluted earnings per share was $0.10 compared to $0.03 a year ago and $0.02 in the prior quarter.
Cash, cash equivalents, and marketable securities were $879 million at the end of the quarter, compared to $844 million in the prior quarter.
Quarterly Financial Segment Summary:
Computing and Graphics segment revenue was $819 million, up 74 percent year-over-year primarily driven by strong sales of RadeonTM graphics and RyzenTM desktop processors. Client average selling price (ASP) increased significantly year-over-year, due to higher desktop processor ASP driven by RyzenTM processor sales. GPU ASP increased significantly year-over-year.
Operating income was $70 million, compared to an operating loss of $66 million a year ago. The year-over-year improvement was primarily driven by higher revenue.
Enterprise, Embedded and Semi-Custom segment revenue was $824 million, approximately flat year-over-year primarily driven by lower semi-custom SoC sales, mostly offset by IP related and EPYCTM processor revenue.
Operating income was $84 million, compared to $136 million a year ago. The year-over-year decrease was primarily due to higher costs partially offset by the net benefit of IP related items.
All Other operating loss was $28 million compared with an operating loss of $363 million a year ago. The year-over-year difference in operating loss was primarily related to the WSA charge in the year ago period.
