AMD Q3 results: even worse than revised expectations

[tviceman]

http://www.techpowerup.com/173557/AMD-Announces-Preliminary-Third-Quarter-Results.html Ouch. Down 10% sequentially instead of the revised 1%, and gross margins took a big hit from an expected 44% to 31%. On top of all this, everyone's favorite oracle, Charlie D - is now forecasting (what I consider to be) bad news for Sea Islands - saying it's looking like March of next year and while AMD expected 30% faster dies compared to Northern Islands, it's looking more like 15% faster - http://semiaccurate.com/2012/10/11/what-is-the-latest-on-amds-sea-islands/. Again, it's Charlie, so take it all with a huge grain of salt. I don't believe the fine details of what he says, although he does break stories that at least originate in truth.

With both AMD and Intel giving revised downward forecasts midway through Q3, and with these results coming in, I kind of expect Nvidia to have a so-so to bad quarter as well (at least compared with their guidance), unless their mobile business continues to increase and make up for the apparent slack in consumer demand.

 

[AnandThenMan]

AMD can't exist on those margins, if they don't improve dramatically AMD is finished.

 

[NIGELG]

Here we go again.

Fake sympathy and doom and gloom.

AMD or at least it's tech/license will survive.If they can't survive some other business will take over.All that tech won't just go to waste.

 

[AnandThenMan]

What sympathy? Low margins like AMD is seeing won't sustain them, those are the facts. And if AMD was an even remotely attractive buyout target, it would have happened already. No one will touch them because they don't want to be involved with competing with Intel. So if AMD goes under, there is not even close to a guarantee that the remaining fragments will keep Intel and Nvidia honest.

We could see years of uncompetitive, poor value products before the market starts to balance itself.

 

[Arzachel]

Here we go again.

Fake sympathy and doom and gloom.

AMD or at least it's tech/license will survive.If they can't survive some other business will take over.All that tech won't just go to waste.

If AMD goes down, it's more likely to be striped for patents and personnel instead of being bought up whole. The tech would probably live on, but I can't really see anyone willing to jump into dedicated GPU manufacturing in such scenario.

EDIT: Basically what AnandThenMan said.

 

[NIGELG]

What sympathy? Low margins like AMD is seeing won't sustain them, those are the facts. And if AMD was an even remotely attractive buyout target, it would have happened already. No one will touch them because they don't want to be involved with competing with Intel. So if AMD goes under, there is not even close to a guarantee that the remaining fragments will keep Intel and Nvidia honest.

We could see years of uncompetitive, poor value products before the market starts to balance itself.

I wasn't referring to you,but you'll see them soon.

I would like to see someone buy the graphics division and revive the Ati brand.

 

[Red Hawk]

Ouch. I wish I could support AMD more. We need to keep a second player in the CPU and GPU markets. I've bought AMD graphics cards and encouraged a friend to get a Llano laptop a year ago for inexpensive gaming. The CPU in my desktop is Intel, simply because I'm a gamer and AMD's CPUs don't cut it. If I was a millionaire I would invest in AMD just so I could help keep it from going under...hope things work out for them.

 

[Insomniator]

Does it matter if they go down? They haven't competed in the $200+ price point for years now.

So the i3 2100 won't get any cheaper... boo hoo.

 

[Red Hawk]

It certainly matters in the GPU market if they go down. Do you think drivers are hit and miss now?

 

[Arzachel]

I would like to see someone buy the graphics division and revive the Ati brand.

That would be nice if you enjoy tablet GPUs I guess? ( Hint: the dedicated graphics industry isn't exactly thriving. If someone would buy up the graphics division, dedicated consumer graphics wouldn't be too high in the to-do list )

Ouch. I wish I could support AMD more. We need to keep a second player in the CPU and GPU markets. I've bought AMD graphics cards and encouraged a friend to get a Llano laptop a year ago for inexpensive gaming. The CPU in my desktop is Intel, simply because I'm a gamer and AMD's CPUs don't cut it. If I was a millionaire I would invest in AMD just so I could help keep it from going under...hope things work out for them.

Make that a billionaire, multiple would be better.

 

[Arachnotronic]

An analysis of the situation: http://seekingalpha.com/article/919691-advanced-micro-devices-warns-on-weak-demand-what-s-next

Company will not be profitable, it seems, this quarter. Full year will likely see a massive hit if Q4 is equally bad.

 

[RussianSensation]

Sad news and things will only get worse once Haswell launches. AMD is running out of $ to invest into R&D for GPUs, smartphone/tablet CPUs and desktop CPUs/servers at the same time. At least during Phenom I/II days the CPU division was somewhat afloat. Without a share issuance/new capital injection, more loans, or a buyout, they are going to be struggling for cash very soon with debt obligations coming up to Global Foundries by end of 2012.

AMD doesn't have 1 high margins business left that's doing well at the moment. At least NV's Quadro/Tesla/Tegra divisions are thriving. NV has no long-term debt which means if the discrete GPU market slows down due to global economic woes, NV can weather the storm easily, unlike AMD. Also, 85% of AMD's problems are CPU/server/APU related and can't be fixed even if HD8000 series does well. With most consumers moving to tablets and smartphones, as much as we want to deny it, but the PC market is shrinking outside of gamers. The "post-PC" era means a company has to jump on the smartphone/tablet bandwagon and both Intel and NV are trying to do so as well. AMD is far behind both companies in those areas. AMD only holds a scant 5.5% of market share in the server space. Ouch.

In hindsight, I can't help but feel that ATI buyout was the worst thing that could have happened to both ATI and AMD. It sucked the funds out of AMD for future CPU development and burdened them with a massive $5B+ debt obligation that drained the company of cashflow for more than half a decade. ATI itself suffered due to cultural clash and having to deal with higher levels of bureaucracy of a larger firm. The merger transition negatively affected HD2900 series based on rumors and it took AMD graphics division 3 generations to recover. Finally that HD7000 series is very good, AMD is running out of $ and that could spell a disaster for HD8000/9000 series, which will hurt us gamers.

I might get another 7970 to help keep the competition alive as I am not touching Bulldozer. AMD's issues are too deep now as I fear lack of cash flow has already affected 3-4 year out desktop CPU/ GPU road maps. When you barely make enough $ to pay SG&A expenses, there isn't much left over for reinvesting your funds into future products.

Trying to execute HSA strategy by enlarging the die size with compute transistors also put the GPU division into a corner. Now they are going to be TDP limited and not have much room to grow the die size on the same 28nm node. NV was smart by stripping Kepler of the compute 'fat' as not many games are using DirectCompute. It seems like it was a smarter strategy on their part reading the market. Then again, AMD almost needs HSA to compete with Intel in the APU space or they are toast. Now NV can easily enlarge GK104 and add more performance and AMD is going to be hitting that TDP wall much sooner.

"Earlier this year, Forrester predicted that tablets would overtake PC laptops by 2016. Microsoft believes tablets will outsell Desktop PCs by as early as next year." ~ TechSpot

 

[Arzachel]

In hindsight, I can't help but feel that ATI buyout was the worst thing that could have happened to both ATI and AMD. It sucked the funds out of AMD for future CPU development and burdened them with a massive $5B+ debt obligation that drained the company of cashflow for more than half a decade. ATI itself suffered due to cultural clash and having to deal with higher levels of bureaucracy of a larger firm. Finally that HD7000 series is very good, AMD is running out of $ and that could spell a disaster for HD8000/9000 series, which will hurt us gamers.

I'd say mismanagement and insider trading didn't do wonders either.

 

[SlowSpyder]

Does it matter if they go down? They haven't competed in the $200+ price point for years now.

So the i3 2100 won't get any cheaper... boo hoo.

In the desktop CPU world, probably not so much at this point. In the graphics world, I think it does.

I really would like to see Steamroller see the light of day, it sounds like it has some solid improvements. I thought AMD had some pretty good quarters lately..?

 

[Lonyo]

In the desktop CPU world, probably not so much at this point. In the graphics world, I think it does.

I really would like to see Steamroller see the light of day, it sounds like it has some solid improvements. I thought AMD had some pretty good quarters lately..?

They had some profitable quarters, ones where they didn't make massive losses. They weren't great, but they weren't negative either.

And yeah, AMD aren't required to keep Intel honest, the shift to more mobile/lower power devices can do that all on its own, and will also keep pushing integrated graphics upwards from Intel as well.
As far as NV, well on the one hand competition is good, on the other, since Intel don't look like they will have high end stuff, having a single player would mean better support for features, since developers would only need to develop for one spec of hardware supporting features.

 

[blackened23]

I know some will laugh at this news but it really does suck IMHO. I'd prefer AMD to be thriving.

 

[Keysplayr]

The only people I can see laughing are those who wish to see AMD/ATI zealots squirm about it. Otherwise, it is a bit scary right now to see how close to implosion AMD really is and why nobody will buy them out with so much debt and also to compete against Intel.
By the way, all it takes to compete against Intel is massive amounts of money. Massive amounts of money can buy the right engineers and software designers and R&D. The entire corporate board should be laid waste to and replaced with some semblance of intelligent decision makers. IMHO.

 

[blastingcap]

Less competition = bad news for consumers. If you thought price/perf isn't moving very fast in CPUs and GPUs now, wait till you see what would happen if Intel and NV didn't have to compete with AMD at all. AMD isn't dead yet, but I hope they have some aces up their sleeves.

Hey I did my part already, buying AMD CPUs and GPUs, though not because I am a fanboy but because Intel charged too much for their server configs and I wanted ECC on my file servers; and because NV was overpriced on 28nm at the time I bought my cards.

 

[Siberian]

In the desktop CPU world, probably not so much at this point. In the graphics world, I think it does.

I really would like to see Steamroller see the light of day, it sounds like it has some solid improvements. I thought AMD had some pretty good quarters lately..?

I think they are in the same spot with their CPUs and GPUs. If the 7 series had been a lot better there is no way NVIDIA could have released a midrange chip as the 680.

 

[Cookie Monster]

Thing is we applaud AMD for bringing out parts that are quite attractive performance/price wise (video cards mind you) but its probably hurting them abit. Atleast on the hardware level, Im sure they could do a better job at cost reductions and resist the urge to cut price so many times.

I guess its a tradeoff you make (increase margin, overclocking takes a hit due to cheaper components, similiar pricing to nVIDIA) but its better than going under I suppose because they can't keep this up forever thats for sure.

edit - tbh I think the only thing thats driving AMD atm is ATi and what it brought for them. Wish AMD didn't drag ATi down with them..

 

[Elfear]

I think they are in the same spot with their CPUs and GPUs. If the 7 series had been a lot better there is no way NVIDIA could have released a midrange chip as the 680.

Would Nvidia have just waited a year to launch GK110? I can't imagine they'd wait so long to sell 28nm cards.

 

[maniacalpha1-1]

So, any chance this will drive the HD 8000 series out sooner?

 

[Hypertag]

So, any chance this will drive the HD 8000 series out sooner?

Well, Charlie has a source saying the 8000 isn't good, has been delayed to March, and is only 15% better.

I wouldn't call charlie pro-Nvidia.

 

[Mopetar]

I wouldn't call charlie pro-Nvidia.

Perhaps the understatement of the year.

That said, if they don't turn things around, I wonder if they'll get scooped up for their talent and patents. Their market cap is only 2.2 billion right now, which makes them easy pickings.

 

[badb0y]

I think they are in the same spot with their CPUs and GPUs. If the 7 series had been a lot better there is no way NVIDIA could have released a midrange chip as the 680.

What an asinine statement, if nVidia can provide better performance they would have especially when AMD 7970 ghz is faster than a GTX 680.

Also what the hell does that have to do with AMD's financial when the GPU buisness is like something like 10% of their revenue(I am not 100% sure on this so let me check that and get back lol)