AMD Q1 2015 Earnings - 23 cents a share loss, to exit dense server (SeaMicro)

[pablo87]

Yes, she changes her mind so fast:



What a difference a quarter can make.

She took over in what, October 2014?

Seems like she's going thru the skeletons in AMD's closets.

Last quarter she discovered how bad the WSA was.

This quarter it was the Seamicro business.

Any guess on this quarter's shock? My money is on Kumar being replaced.

Q3 will be the channel inventory write OFF (not write down which means it gets recirculated) otherwise the remaining channel players will simply refuse to take the new stuff.

Death by a thousand cuts. Know it well, very unpleasant business.

 

[frozentundra123456]

Yeah that's worrisome. But I guess they can bring in more capital through a new stock issue.

Also, put it into context: $1B is what Intel loses on mobile alone per quarter (!).

Or we could really put it into perspective. Intel made 2.0 billion net income in Q1 2015. What was that figure now for AMD? Oh wait it was negative.

 

[B-Riz]

My comment from the vid card thread, http://forums.anandtech.com/showpost.php?p=37336559&postcount=25

"The PC market, in reality, is small potatoes to Steam boxes and next gen consoles.

The 390 series is next gen console stuff before next gen console stuff is slated to replace PS4 and XB One.

To think AMD is going to change anything after locking up a whole market that Intel and nVidia didn't really want to fight for...

The fact that PC gamers are beside themselves waiting and wanting to buy this stuff and abuse it, (an ingenious performance test for moving it towards console integraton) is frankly amazing, and am surprised no on else has glommed on to it."

And http://forums.anandtech.com/showpost.php?p=37336808&postcount=29

"Look at the financial tables, specifically Dec 27 2014.

The Enterprise, Embedded and Semi-Custom made big money, and all that tech comes from Computing and Graphics.

They get to develop and sell essentially niche products that trickle down to their new console market.

Of course March 28 2015 looks bad for Computing and Graphics, they are spending money on getting enough product stockpiled for the next GPU release.

And working on the new CPU slated for release next year..."

AMD had this all planned out years ago, probably at 79xx GCN 1.0 launch.

To see this FUD on display, with doom and gloom thrown in, pfft, they locked down the console market.

Enjoy being a guinea pig for it on PC, getting to play with the newest stuff first. 🙂

 

[ShintaiDK]

Or we could really put it into perspective. Intel made 2.0 billion net income in Q1 2015. What was that figure now for AMD? Oh wait it was negative.

And even better, they payed a 1.1B$ dividend to its stock holders.

SANTA CLARA, Calif., April 14, 2015 -- Intel Corporation today reported first-quarter revenue of $12.8 billion, operating income of $2.6 billion, net income of $2.0 billion and EPS of 41 cents. The company generated approximately $4.4 billion in cash from operations, paid dividends of $1.1 billion, and used $750 million to repurchase 21 million shares of stock.

 

[mrmt]

She took over in what, October 2014?

Seems like she's going thru the skeletons in AMD's closets.

Last quarter she discovered how bad the WSA was.

This quarter it was the Seamicro business.

Any guess on this quarter's shock? My money is on Kumar being replaced.

Q3 will be the channel inventory write OFF (not write down which means it gets recirculated) otherwise the remaining channel players will simply refuse to take the new stuff.

Death by a thousand cuts. Know it well, very unpleasant business.

She was COO and VP before assumming the CEO position, she had to know those things before. What caught my attention is that she doesn't seem to have a consistent plan to turn the company around. She's being too slow in changing things, like taking 6 months to close down SeaMicro and 7 months until coming forward with a public, reshufled product roadmap.

Kumar is a weak CFO, but I don't think he's the main issue there. That company needs a CEO who knows where to head the company, that understand the IHV market and can make money out of it. No CFO could have made Bulldozer to be a better product on the market, simply because Bulldozer was running against every single market trend we can think of, and by the looks of it AMD screwed up again with K12/Zen, they will reach the Microserver market by the time every big OEM company is hitting the brakes on these initiatives.

My guess is another reorg in Q3, but not before another product line being scrapped at the FAD.

 

[Arachnotronic]

I think K12 may be AMD's first and last custom ARM core. With microserver market not turning out as expected, and with AMD still salivating over Intel's successful x86 server chip market, I think that it is only logical to kill future ARM core development to focus on making better future x86 cores.

There is no market AMD can go after with ARM that it can't go after with x86; the reverse is not true.

 

[Fjodor2001]

Or we could really put it into perspective. Intel made 2.0 billion net income in Q1 2015. What was that figure now for AMD? Oh wait it was negative.

I figured I'd get that response from some. But it was not the point I was trying to make.

My intention was instead primarily to point out the fact that Intel R&D seems less efficient. They spend much more R&D money for what they get compared to AMD.

 

[mrmt]

"The PC market, in reality, is small potatoes to Steam boxes and next gen consoles.

I'm not sure what you call the small potato here. Intel has sales above 50 billion with more than 60% gross margins (above 30 billion in operating profits), while the console market has about 2 billion dollars per year with less than 20% of gross margin (less than 400 million). I really don't get how you can even bother to compare two income streams that have a gulf of two orders of magnitude separating them.

 

[B-Riz]

She was COO and VP before assumming the CEO position, she had to know those things before. What caught my attention is that she doesn't seem to have a consistent plan to turn the company around. She's being too slow in changing things, like taking 6 months to close down SeaMicro and 7 months until coming forward with a public, reshufled product roadmap.

Kumar is a weak CFO, but I don't think he's the main issue there. That company needs a CEO who knows where to head the company, that understand the IHV market and can make money out of it. No CFO could have made Bulldozer to be a better product on the market, simply because Bulldozer was running against every single market trend we can think of, and by the looks of it AMD screwed up again with K12/Zen, they will reach the Microserver market by the time every big OEM company is hitting the brakes on these initiatives.

My guess is another reorg in Q3, but not before another product line being scrapped at the FAD.

AMD did something Apple is trying to do, and Intel has kind of done (many DVRs have Intel inside), but not at the level of success of AMD.

They got into many peoples living rooms and power the gaming and media consumption hubs.

They also generated a crap ton of goodwill with gaming companies by pushing Mantle and forcing Microsoft to something better with DX 12.

The products coming out in the next few years are the groundwork for inexpensive, mass produced 4k at 60 FPS consoles.

Dismiss it now, but they did it once with PS4 and XB One.

 

[B-Riz]

I'm not sure what you call the small potato here. Intel has sales above 50 billion with more than 60% gross margins (above 30 billion in operating profits), while the console market has about 2 billion dollars per year with less than 20% of gross margin (less than 400 million). I really don't get how you can even bother to compare two income streams that have a gulf of two orders of magnitude separating them.

For AMD, PC is small potatoes, Intel has it locked down.

Look to the future, try not to focus so much on the present.

 

[ShintaiDK]

I figured I'd get that response from some. But it was not the point I was trying to make.

My intention was instead primarily to point out the fact that Intel R&D seems less efficient. They spend much more R&D money for what they get compared to AMD.

Yes, badly spend R&D. Sits on some 97% of PC CPU revenue and makes crapload of money and rewarding investors. While the other company in free fall is...what again, better?

 

[mrmt]

They got into many peoples living rooms and power the gaming and media consumption hubs.

That's not AMD business. AMD didn't develop the ecosystem, it didn't develop all the IP, they didn't develop the supply chain, they didn't develop devel-rel and they didn't develop the products themselves. If AMD didn't want to provide it Sony and MSFT would just grab another IHV and get another chip, just like they did with the previous generation. AMD is just a supplier on the console supply chain.

 

[mrmt]

For AMD, PC is small potatoes, Intel has it locked down.

Look to the future, try not to focus so much on the present.

And do you think the consoles will be the dominant gaming platform? Don't forget the cloud, and don't forget the billions of mobile devices that can run simpler games, and those two fast growing markets are markets AMD is ill-equipped to pursue, if equipped at all.

 

[witeken]

What if AMD hadn't had the consoles? Very kind of Nvidia and Intel for giving it to AMD, but I bet the next console generation might have Intel inside 😉.

 

[B-Riz]

That's not AMD business. AMD didn't develop the ecosystem, it didn't develop all the IP, they didn't develop the supply chain, they didn't develop devel-rel and they didn't develop the products themselves. If AMD didn't want to provide it Sony and MSFT would just grab another IHV and get another chip, just like they did with the previous generation. AMD is just a supplier on the console supply chain.

But they provided at a desired cost, an x86 CPU with an excellently performing GPU.

MSFT and Sony finally saw the light, that x86 development has a far bigger base; that trying to design a console from scratch and have devs spend a year learning how to work with it is a waste.

Frankly, there was no other IHV that had an x86 CPU with GPU that did what they wanted, or they would have gone with them.

 

[AtenRa]

but I bet the next console generation might have Intel inside 😉.

April 1st was two weeks ago 😛

 

[Fjodor2001]

Yes, badly spend R&D. Sits on some 97% of PC CPU revenue and makes crapload of money and rewarding investors. While the other company in free fall is...what again, better?

Yes, bad R&D efficiency in some areas for sure, better in others. Intel is good at marketing and segmenting the market though.

The fact that Intel has a large desktop PC market share does not say anything for certain about it's R&D efficiency. Who knows what AMD or some other company could have done if having had access to an R&D budget of Intel's size.

 

[mrmt]

Frankly, there was no other IHV that had an x86 CPU with GPU that did what they wanted, or they would have gone with them.

Frankly no other IHV would have swallowed the kind of crappy margins AMD did on this deal. Who gets 15-18% margins on leading edge custom silicon?

 

[witeken]

April 1st was two weeks ago 😛

I think Brian Krzanich would seriously consider it since a console computes and is connected, so BK wants to let consoles do their computing best with Intel 😉. With Intel's process lead and Gen12 or so architecture, that would probably make a compelling APU (depending on the price Sony and MS are willing to pay :biggrin🙂.

Oh, and with Atom (Broxon's Tock successor or so) (or Core?), it would also have a decent CPU.

 

[B-Riz]

And do you think the consoles will be the dominant gaming platform? Don't forget the cloud, and don't forget the billions of mobile devices that can run simpler games, and those two fast growing markets are markets AMD is ill-equipped to pursue, if equipped at all.

Console is the mass market / mass appeal of what the PC has pioneered.

Loooool, the cloud is a tool. Look at Titanfall, and what MSFT provided with Azure cloud services to run the back-end of it.

Streaming will never replace a local, personal experience.

Mobile is not the same experience as a console or PC game.

For price / performance now, consoles are PC's without a lot of extra cost and hassle.

 

[B-Riz]

Frankly no other IHV would have swallowed the kind of crappy margins AMD did on this deal. Who gets 15-18% margins on leading edge custom silicon?

What margins should they have gotten?

In the end it is a commodity chip, the real win was the contract to supply PS4 and XB One innards.

And now, probably the next generation of those consoles.

 

[mrmt]

Console is the mass market / mass appeal of what the PC has pioneered.

Loooool, the cloud is a tool. Look at Titanfall, and what MSFT provided with Azure cloud services to run the back-end of it.

I'm not talking about Simcity or Titanfall clould gaming, try searching for Microsoft DeLorean.

 

[mrmt]

In the end it is a commodity chip, the real win was the contract to supply PS4 and XB One innards.

And now, probably the next generation of those consoles.

No, it's not a commodity chip, is a custom chip developed to the OEM, a chip that to develop AMD had to shift engineering resources to it. And what they got? Less than half of their corporate margin by the time of the chip design. 400MM per year in operating profits, less than half of what Intel spends on contra-revenue.

It's a really small deal and with a terrible financial structure. Only AMD could have swallowed this bitter pill.

 

[B-Riz]

I'm not talking about Simcity or Titanfall clould gaming, try searching for Microsoft DeLorean.

"Nearly lag free"

As a dedicated PC Gamer (and sometimes console gamer), I will stop localized play when my hands are cold and I am dead.

And that tech could only be possible if we all get some synchronous gigabit internet for about $30 a month...

 

[B-Riz]

No, it's not a commodity chip, is a custom chip developed to the OEM, a chip that to develop AMD had to shift engineering resources to it. And what they got? Less than half of their corporate margin by the time of the chip design. 400MM per year in operating profits, less than half of what Intel spends on contra-revenue.

It's a really small deal and with a terrible financial structure. Only AMD could have swallowed this bitter pill.

http://www.merriam-webster.com/dictionary/commodity

" a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price"

They won on a target price and performance.

It is a custom chip designed to be mass produced for a mass market product.