Post Earnings Coverage as AMD Revenue Soars 23 Percent

LONDON, UK / ACCESSWIRE / October 24, 2016 / Active Wall St. announces its post-earnings coverage on Advanced Micro Devices, Inc. (NASDAQ: AMD). The company posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 20, 2016. The Chipmaker reported a second successive quarter of higher sales, bolstered by higher demand for graphics chips used in gaming consoles. Register with us now for your free membership at:

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Earnings Reviewed

For the three months ended on September 24th, 2016, AMD reported revenue of $1.31 billion, up 23% year-over-year from $1.06 billion, primarily due to record semi-custom SoC and higher GPU and mobile APU sales, partially offset by client desktop processor and chipset sales. The company's revenue rose above analysts' average estimates of $1.21 billion.

For Q3 2016, AMD's net loss widened to $406 million, or $0.50 per share, from $197 million, or $0.25 per share, a year earlier. The decline was driven by a $340 million Wafer Supply Agreement (WSA) charge and a $61 million loss on debt redemption offset by increased revenue. The company reported Non-GAAP net income of $27 million, or $0.03 per share. AMD, the second biggest supplier of PC processors following Intel Corp., has reported four consecutive years of losses.

Revenue by Discipline

For Q3 FY16, AMD's computing and Graphics' segment posted revenue of $472 million, up 9% sequentially and 11% from Q3 2015. The improvement in sales was attributed to increased sales of GPUs, offset by decreased sales of client desktop processors and chipsets. The year-over-year increase was also driven by sales growth in client mobile processors. Client average selling price (ASP) decreased sequentially driven by lower mobile and desktop processor ASPs and was flat year-over-year. The company's Enterprise, Embedded, and Semi-Custom segment's revenue surged 41% sequentially and 31% on a y-o-y basis to $835 million due to higher sales of semi-custom SoCs. Both Microsoft Inc. (NASDAQ: MSFT) and Sony Corp. (NYSE: SNE) have announced launch of new version of their consoles with AMD enabled chips. Microsoft introduced the Xbox One S and Sony announced a new version of PS4, as well as the PS4 Pro with support for 4K gameplay, both powered by AMD semi-custom SoCs.


For Q3 2016, AMD's gross margin was 5% down from 31% from Q2 2016 due to a $340 million charge related to the 6th amendment to the WSA with GLOBALFOUNDRIES. Non-GAAP gross margin of 31% was flat quarter-over-quarter. The company reported operating expenses of $376 million, compared to $353 million for Q2 2016.

Q3 2016 Highlights

On October 14th, 2016, AMD announced a deal to provide its graphics processing units to Alibaba Cloud, the cloud computing arm of Alibaba Group Holding (NYSE: BABA). Through the partnership, Alibaba Cloud plans to use AMD technology to help expand its cloud computing offerings and accelerate adoption of its cloud-based services. During the reported quarter AMD completed capital markets transactions that raised approximately $1.4 billion in cash, before issuance costs, to lower overall debt, reduce interest expense payments, and further support growing business opportunities.

Current Outlook

For Q4 2016, AMD expects revenue to decrease 18% sequentially, plus or minus 3%. The midpoint of guidance would result in Q4 2016 revenue increasing approximately 12% on y-o-y basis and 2016 revenue increasing 6% from 2015.

Cash Flow & Balance Sheet

As of September 24th, 2-16, AMD had cash and cash equivalents worth $1.26 billion, up $301 million from the end of the prior quarter. The quarter-end cash balance includes approximately $274 million of net proceeds from recent capital markets transactions. Total debt at the end of Q3 2016 was $1.63 billion, down $606 million from the prior quarter as a result of the timing and execution of Q3 2016 debt reduction actions and due to bifurcation of the newly issued 2.125% Convertible Notes due 2026 into equity and liability components based on GAAP accounting regulations.

Stock Performance

Last Friday, the stock closed the trading session at $6.52, tumbling 6.32% from its previous closing price of $6.96. A total volume of 64.15 million shares have exchanged hands, which was higher than the 3-month average volume of 39.10 million shares. Advanced Micro Devices' stock price advanced 2.35% in the last month and 88.99% in the previous six months. Furthermore, on a year to date basis, the stock surged 127.18%.

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SOURCE: Active Wall Street

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