AMD Announces Q3 2016 Financial Results

Today AMD announced their third quarter earnings for the fiscal year 2016. Revenue was up to $1.307 billion, up 23% from a year ago.  However their operating income and net income were not quite so lucky, with AMD showing an operating loss of $293 million for the quarter, compared to a $158 million operating loss a year ago, and net AMD showed a loss of $406 million, or $0.50 per share, compared to a net loss of $197 million, or $0.25 per share, a year ago.

AMD took a charge of $340 million this quarter for their sixth amendment to the wafer supply agreement with GlobalFoundries. This has been excluded in their Non-GAAP measures to show the core business, where they had the same $1.307 billion revenue, but showed an operating income of $70 million for the quarter, compared to an operating loss of $97 million a year ago. Non-GAAP net income for the quarter was $27 million, compared to a $136 million loss in Q3 2015.

Thanks to the charge, gross margin in GAAP terms was an abysmal 5% for the quarter, but Non-GAAP was 31%.

AMD’s Computing and Graphics segment had revenue of $472 million this quarter, which is up 11% from Q3 2015. Increased sales of GPUs are attributed to the gain, but the gain was offset by a drop in desktop processor sales, though they have seen an increase in sales of notebook processors. This segment continues to be unprofitable, having an operating loss of $66 million this quarter, but that is much better than the $181 million operating loss a year ago. Once again, GPU revenue has helped here tremendously. GPU average selling price (ASP) increased with higher channel and professional graphics ASPs. CPU ASP was flat year-over-year.

Enterprise, Embedded, and Semi-Custom continues to grow, and has easily surpassed the Computing and Graphics division, with revenues of $835 million, which is up 31% year-over-year. Semi-custom SoC sales continue to be the bright spot for AMD, with AMD have locked up both current generation consoles in the Xbox One, and PlayStation 4, and their refreshes in the Xbox One S and PlayStation 4 Pro, as well as the upcoming Xbox Project Scorpio. Best of all for AMD, this segment continues to be profitable, with an operating income of $136 million this quarter, up from $84 million a year ago.

AMD plunked the wafer agreement charge right into their All Other category, which had an operating loss of $363 million this quarter, compared to an $11 million loss last quarter, and a $61 million loss in Q3 2015.

AMD has seen success with its Polaris architecture in the GPU space, and they hope to see some success with their upcoming Zen CPU architecture, with their Summit Ridge desktop processor and a 32-core, 64-thread server product code named Naples.

Looking forward to next quarter, AMD expects revenues to decrease 18%, plus or minus 3%.

Intel Announces Q3 FY 2016 Earnings: Record Quarterly Revenue

Earlier this week, Intel announced their earnings for the third quarter of their 2016 fiscal year, and the company achieved new records across their business lines, resulting in a record quarterly revenue of $15.8 billion USD, up 9% compared to Q3 2015. Intel achieved margins of 63.3%, up 0.3% year-over-year, and their operating income increased 6% to $4.5 billion. Net income for the quarter was $3.4 billion, up 9%, and earnings per share came in at $0.69.

Intel also announced Non-GAAP results, which exclude certain things like acquisition-related adjustments, deferred revenue write-down, restructuring, and more. For a full list, please check out their lengthy explanation on their earnings report. On a Non-GAAP basis, revenue was the same $15.8 billion, margins were up 1.3% to 64.8%, and operating income was up 18% to $5.1 billion. Net income was up 21% to $3.9 billion, and earnings per share were up 21% to $0.80.

Intel’s internal divisions are broken down into six groups. The Client Computing Group, which is PCs, tablets, phones, and wired and wireless communication. The Data Center Group focuses on enterprise and the cloud. Internet of Things is retail, transportation, industrial, building, and home use electronics. Non-Volatile Memory Solutions is mostly Intel’s SSD efforts. Intel Security Group is security software (McAfee) and new for fiscal 2016 is the Programmable Solutions Group, formed after the acquisition of Altera, and features field-programmable gate arrays and related products.

For Q3, the Client Computing Group had revenues of $8.892 billion, which is up from $8.506 billion a year ago. Unit volumes were actually down 4% compared to the same point a year ago, and volumes are down 11% for the year compared to the first three quarters of 2015, but average selling prices (ASP) continue to increase. For this quarter ASP was up 6% compared to a year ago, and is up 12% for the year so far. Breaking it down a bit further, Intel has had 4% growth in notebook platform sales for this quarter (year-over-year) with ASP up 3% in the notebook segment. Desktops dropped 6% in volume, but have kept the same average selling price, and “tablet platform volumes decreased” which is a non-numerical way to say that Intel is getting out of the dedicated tablet market altogether.

The Data Center Group had revenues of $4.542 billion this quarter, up from $4.140 billion a year ago. Unit volumes increased 12% this quarter compared to Q3 2015, and for the year unit volumes are up 9%. Average selling price has decreased though, down 3% this quarter, and down 2% for the year so far.

Intel doesn’t break out the numbers as specifically for the remaining groups, but Non-Volatile Memory Solutions had revenue that was more or less flat at $649 million for the quarter, compared to $655 million a year ago. Internet of Things continues to grow, up to $689 million in revenue, compared to $581 million in Q3 2015. The Intel Security Group increased revenue from $506 million to $537 million, and the Programmable Solutions Group had revenue of $425 million, with no comparison to last year since it is a newly acquired product group, but up 6% compared to Altera’s numbers from last year.

Intel has made some announcements in this quarter as well. Intel started sampling Stratix 10 in this quarter, which is the only 14 nm FPGA. They also announced they will sell 51% of the Intel Security Group, and establish an independent McAfee security company with the private equity firm TPG. Intel is also shipping “thousands of samples” of their new 3D XPoint to customers, and should have it qualified by the end of this quarter. Speaking of qualified, the Intel 7480 modem was qualified for AT&T this quarter, which is about a year after the 7360 modem got qualified.

Looking forward, Intel is forecasting revenues for Q4 at $15.7 billion, plus or minus $500 million, and margins of 61%.

Intel has continued to diversify its portfolio, and has been building out other divisions to assist with growth while the PC market continues to decline, and while the Client Computing Group continues to be their largest division, they have had strong growth in other areas like the Data Center Group which had record revenue this quarter, and IoT which continues to grow quickly.

Source: Intel Investor Relations