AMD Probably Lost Market Share in Q4

Advanced Micro Devices' (NYSE: AMD  ) larger peer, Intel (NASDAQ: INTC  ) , reported results that were clearly negative. While the results weren't great for Intel (particularly the weakness in enterprise data centers), they were even worse for AMD. In particular, Intel was able to maintain roughly flat PC sales for Q4 2013, implying that -- in a down PC environment -- AMD lost some pretty significant share during the quarter.

The rough math
According to Gartner, a leading market research firm, PC shipments were down about 6.9% during Q4 2013 from the year-ago period. Note that in Intel's Q4 results, while PC sales as a whole were down for the year, the company actually managed to guide to flat revenue for the quarter on a year-over-year comparison.

These numbers tend to suggest that Intel managed to take some pretty significant PC revenue share for the quarter from AMD as this space has precisely two competitors. Driving this was likely the following factors:

  • AMD's competitive position in the higher end of the PC market (where tablet cannibalization seems nearly non-existent) is not particularly good from either a cost-structure perspective or from a performance/watt perspective. It is difficult for AMD to compete (profitably) on cost.
  • Intel, which has traditionally not played aggressively in the low end of the PC space, is desperately trying to keep its revenue base in PCs afloat. This suggests that Intel will fight very aggressively for share in the lower end, which may manifest itself in Q4.

It will get worse
Throughout the year, Intel will push its Bay Trail-M parts to gain market share at the low end (and, thanks to the improved power characteristics of this part, it should enable more aesthetically pleasing designs). While AMD has a performance-competitive part with "Kabini" for the lower end of the market, the major concern here is that Intel still has both a superior cost structure and more marketing clout.

On top of that, Intel typically works very closely with its OEMs to "fine tune" the systems that they ship. AMD does so as well, to the extent that it can, but it will be extremely difficult for AMD to compete with what is likely to be aggressive pricing as well as branding/marketing support.

Intel shielded by enterprise, AMD not so much
One final point to note is that Intel saw strength in enterprise/business PC sales, a market segment in which AMD is not a particularly large player. This would tend to suggest, then, that Intel is better exposed to the healthier sub-segments of the PC market. Of course, on the flip side, AMD is quite exposed to the lower end of the consumer market, which (particularly in the Asia-Pacific region) is vulnerable to tablet cannibalization. Intel also noted strength in the enthusiast/gamer market where, once again, AMD's processors are generally viewed as inferior (as they lack the raw performance to adequately compete).

Conclusion
This quarter is likely to be particularly ugly for AMD, which is exposed heavily to the low end of the PC market. In addition to secular difficulties for this segment, there will be an unprecedented competitive threat that emerges in 2014 and becomes much worse over the next two years as Intel's low-end PC lineup becomes more potent. As a result, the company needs to compete in tablets at a good cost structure against powerful opponents. 

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  • Report this Comment On January 19, 2014, at 10:01 AM, mycardbrokedown wrote:

    Oh look the cherrypicker is back! Trying to sell some cherries to the gardners Ashraf? Again???

    The facts cherrypicker expert is back... he always only writes badly about amd and only good things about intel and nvidia... let's see the attrocious competition amd is facing 2014:

    Intel delayed broadwell so much now it's comming earliest q3. And that admited by their ceo that not because of technical issues but because the margins are bad... read 14nm is extremelly expensive... so much so that even with intels strive to make mobile chips viable and it's financials it's still to expensive... they already subsidise all mobile line... well amd, tsmc and glofo already stated that 20& beyond will cost more per transistor rather then less... so market push will be very limited... so much so that not even intel can handle the costs...

    Nvidia... denver is slated for h2 2014... the product exists much like intels broadwell they both showed them off... but 0 design wins... amd on the other hand has mullins design wins as of ces2014.... more then that nvidua's maxwell will be 28nm at least at first... that means that nvidia has been cut out by apple and qualcomm... maxwell needs 20nm badly... it can barelly keep up with the new hawaii using a 30% bigger die, fully activated golden gk110 revised gk110 with fully matured drivers & process. Besides that hawaii apparently has ~20% more potential under the hood because of inactibe CUs

    This is the shape of the competition... now to amd... just launched kaveri which is not a smashing success but it is a success and future software will take ever more advantage of the architecture... it is cheap and it ridicules intel at price range... its graphics processor is similar to the very highend iris pro found in 600+ $ costing little over 150...

    also amd has troubles honoring the demand as is apparent from tsmc's statement that higher volumes have been asked for. Hawaii gpu's are sold out since day1 and any supply poping up flies away in hours... the price has skyrocketed because of demand it's still selling out at nearly 700$ market driven price even though the msrp is 150$ lower.

    Kaveri is the most powerful allround cpu you can get at any of it's price ranges/power usages and performance.

    Ashraf you should really stop using... you're clearly delusional... keep buying double overpriced stock i really hope you do have lots of intel shares so you can feel the pain when intel will be cicked down off of its high horse by apple and qualcomm and the rest of the pack...

  • Report this Comment On January 19, 2014, at 2:05 PM, ericcinvest wrote:

    So i have a question how can michael Blair for seeking alpha write

    "PC Shipments Reported By Gartner Suggest Intel Will Beat The Street In Q4" to justify that intel will beat street estimates by 10 cents. Then when their Q4 actual underachieves you write this article using the same report he did? This doesn't make any sense and makes me call Erroneous. Erroneous on all fronts...

  • Report this Comment On January 19, 2014, at 2:14 PM, KenLuskin wrote:

    AMD's discrete GRAPHIC chips sales will SURGE in 2014, regardless PC chip market share. CONSOLE chip sales Profits will DWARF

    AMD's discrete GRAPHIC chips sales will SURGE in 2014, regardless of their PC chip market share.

    People BUY HARDWARE so they can run software!

    ALL the NEW AAA games are OPTIMIZED for AMD hardware.

    That is WHY AMD has discrete GPU design wins in MORE than half of the NEW Haswell Laptops!!!

    OEMs looked at the performance of the NEW games using MANTLE on AMD GPUs versus Nvidia GPUs, and awarded DESIGN WINS to AMD!!!

    Apple Guru analysts expect the MAC Pro to sell appx 1.1 million units in 2014.

    AMD has TWO, count em, TWO professional grade GPUs in each MAC Pro.

    = appx. $750 million of HIGH PROFIT business in 2014, in the professional area, on TOP of their other professional sales.

    Professional sales per quarter in the first 3 quarter of 2013 were about $50 million, or a $200 million annual run rate.

    So, that will increase in 2014 to about $1 BILLION!!

  • Report this Comment On January 19, 2014, at 2:21 PM, KenLuskin wrote:
  • Report this Comment On January 19, 2014, at 2:22 PM, KenLuskin wrote:

    AMD Notebook sales up +10% through Western European Distribution

    in early Q4 2013

    London, 9th December 2013 - AMD-based Notebook unit sales through Western

    European Distribution increased by +10% year-on-year during the first eight

    weeks of Q4 2013, according to data published by CONTEXT, the European IT

    market research company.

    In a notebook market down by -12% year-on-year for the period, AMD-powered

    laptops saw their share increase from 14% in early Q412 to 18% for the

    equivalent period of 2013.

    “What we see here is an example of the PC market fragmenting into more

    discreet customer segments”, said Jeremy Davies, CEO & co-founder at CONTEXT.

    “Home buyers want tablets, businesses want higher specification notebooks and

    are willing to pay more, and where a consumer has chosen a notebook, value is a

    prime motivator.

  • Report this Comment On January 19, 2014, at 2:22 PM, KenLuskin wrote:

    About CONTEXT

    Headquartered in London with over 140 staff in 12 countries, CONTEXT

    specialises in tracking technology sales and pricing across the globe. With real

    time data captured from a wide range of channel sources including exclusive

    access to Global Technology Distribution Council (GTDC) members, the US$3

    billion of sales processed each week in Europe provides the most accurate

    channel market information available today across a range of business and

    consumer technology products. C

  • Report this Comment On January 19, 2014, at 2:27 PM, KenLuskin wrote:

    Focusing on AMD PC chip market share is a FOOL's game!

    AMD is actively and SUCCESSFULLY been diversifying AWAY from relying upon PC chip sales.

    In 2014, PC chips sales will LESS than 30% of total sales.

    Because sales of CONSOLES and Discrete GPUs are SURGING.

    You ARE a FOOL!

    Anyone who listens to you is a FOOL!

  • Report this Comment On January 19, 2014, at 3:56 PM, Jberglive wrote:

    Just take a look at that Context link Ken posted. The facts are right there.

    Or just take a look at the revolving news banner on their front page:

    http://www.contextworld.com/en/

  • Report this Comment On January 19, 2014, at 9:40 PM, longjon123 wrote:

    Ashraf, you above all should understand how PCs fit in perspective to AMD's current business model. Particularly alarming is how you project AMD's "low end" PC segment into its overall quarterly performance.

    In the past, I enjoyed your pointed, informed, and well-written articles on Seeking Alpha. I can't claim to know for which audience you write here on Motley Fool, but I do claim that your articles lately have become opinionated, biased, and increasingly irrelevant. Case in point:

    "AMD does [work closely with OEMs] as well, to the extent that it can, but it will be extremely difficult for AMD to compete with what is likely to be aggressive pricing as well as branding/marketing support."

    It is entirely possible that it is my fault for holding you and Motley Fool to a higher standard. I just can't help but make my observation as your thesis certainly leaves a reasonable doubt about its conclusion.

  • Report this Comment On January 19, 2014, at 10:08 PM, longjon123 wrote:

    Ashraf, you above all should understand how PCs fit in perspective to AMD's current business model. Particularly alarming is how you project AMD's "low end" PC segment into its overall quarterly performance.

    In the past, I enjoyed your pointed, informed, and well-written articles on Seeking Alpha. I can't claim to know for which audience you write here on Motley Fool, but I do claim that your articles lately have become opinionated, biased, and increasingly irrelevant. Case in point:

    "AMD does [work closely with OEMs] as well, to the extent that it can, but it will be extremely difficult for AMD to compete with what is likely to be aggressive pricing as well as branding/marketing support."

    It is entirely possible that it is my fault for holding you and Motley Fool to a higher standard. I just can't help but make my observation as your thesis certainly leaves a reasonable doubt about its conclusion. Personally, I'm disappointed.

  • Report this Comment On January 19, 2014, at 11:06 PM, bosorot wrote:
  • Report this Comment On January 20, 2014, at 9:48 AM, mikelgh100 wrote:

    I love when people write articles and are completely guessing at the future. Words like "probably"m "implies".

    Hard facts or don't bother writing.

  • Report this Comment On January 20, 2014, at 10:02 AM, JimBo11 wrote:

    Ashraf Eassa: AMD may not lose market share since its main business is not PC alone. Its APU and low power chip appears to be stabilized. However, don’t expect AMD’s stock price to rise by much since its cash position is in a very precarious position nor its profit will rise by much.

  • Report this Comment On January 20, 2014, at 10:05 AM, smallormidcapman wrote:

    This "article" proves why you are an idiot...or a disingenuous AMD basher...or both. You think in terms of only zero sum winners & losers only...never able to read the minutia of the data properly. ALL the anecdotal evidence from Gartner, IDC, and Context painted a picture that said "in the 4th quarter PC sales/shipments firmed up well above expectations".

    So you take the fact that Intel was flat in PC sales from Q4 2012 vs Q4 2013 and extrapolate the following: "These numbers tend to suggest that Intel managed to take some pretty significant PC revenue share for the quarter from AMD as this space has precisely two competitors." Ummm....NO IT DOESN'T.

    What they "tend to suggest" is that you are an idiot seeing the world through an Intel only lens. What they really suggest is that the data from Gartner, IDC, Context and now REAFFIRMED BY INTEL'S RESULTS show that the PC market DID in fact firm in Q4 2013 and that sales/shipments were MUCH IMPROVED for the ENTIRE PC sector. As you rightly point out, there are two x86 manufacturers. What you WRONGLY point out is that only Intel benefited from an improved PC market...really? "A rising tide will lift all boats"...unless your name is Ashraf...then it only lifts Intel and sinks AMD.

    Not only will AMD's report show how wrong you are...they will likely show an INCREASE year/tear unlike Intel's "flat". So you will be DOUBLY wrong...instead of "lsot significant share" it will likely turn out that AMD "gained share".

    Congrats...you are the Mayor of Clowntown...errr I mean the the biggerst FOOL at Motley.

  • Report this Comment On January 20, 2014, at 10:10 AM, Caldi1 wrote:

    Good Article. Been Mulling over whether or not to sell my AMD stock, will do it first thing am Thanks!

  • Report this Comment On January 20, 2014, at 10:11 AM, Caldi1 wrote:

    Good Article. Been Mulling over whether or not to sell my AMD stock, will do it first thing am Thanks!

  • Report this Comment On January 20, 2014, at 10:12 AM, rav55 wrote:

    AMD sold more x86 cpu's this last quarter than the previous.

    Every x86 cpu that AMD sells is one that Intel does not sell.

    That's called market share.

    That means the console wins give AMD a HUGE boost in market share in the x86 environment.

    I know that you don't like this FACT Ashraf. But maybe you should try writing about facts sometime.

  • Report this Comment On January 20, 2014, at 10:15 AM, smallormidcapman wrote:

    "AMD Likely GAINED Market Share in Q4"

    Fixed

    $1.85 billion and .16 cents...up from my original $1.65 billion and .12 cents

    I am adding another $100 million in extra console revs

    I am adding another $100 million in dGPU sales

    I am adding another combined .04 eps for both

    How you can be allowed to write for either SA or Motley is truly amazing...given your acumen for picking stocks and reading financial tea leaves.

  • Report this Comment On January 20, 2014, at 10:40 AM, bluesky64 wrote:
  • Report this Comment On January 20, 2014, at 10:40 AM, byteMeImblonde wrote:

    And yet the the major game console companies (Sony Playstation, Micrsoft XBox,,,) unanimously chose AMD to design their next CPU,,,surely Intel can't be entirely happy with the future looking grim due to ARM's utter dominance in dictating low-cost, low-power embedded markets,,,the only one that has long-term growth significance.

  • Report this Comment On January 20, 2014, at 1:43 PM, kkuteyi wrote:

    Remember, he said probably i.e. he was guessing. That is the end of the story. Why are you questioning his guess.

  • Report this Comment On January 20, 2014, at 2:09 PM, Caligula wrote:

    Guess he forgot about the GPU sales to the console makers, or their deal with Verizon, or the appearance of AMD APU/GPU units in the MacPro for the first time (and their implied inclusion in later Mac products particularly the iMac), or a number of other things that just didn't fit in well with his narrative.

    Ah well, it be upon the heads of the people who heed his feckless advice. Me, I'm holding onto my AMD position for now, I see little reason to change it given that no matter what this earnings erases a horrible quarter from AMD's record.

  • Report this Comment On January 20, 2014, at 2:21 PM, smallormidcapman wrote:

    "Remember, he said probably i.e. he was guessing. That is the end of the story. Why are you questioning his guess."

    Ashraf track record speaks for itself:

    1. When he says "probably" it means he is guessing.

    2. His "guesses" always favor Intel and indict AMD.

    3. His guesses involve taking the data and molding it into an argument with a pro-Intel and con-AMD bias.

    4. He is almost always WRONG...not close...WRONG

    In this case he takes only the limited Gartner data to make his argument. Had he not ignored the IDC and Context data and coupled it with the Gartner data he cites...he would have been left with an inescapable conclusion: THE PC MARKET AS A WHOLE TURNED POSITIVE IN LATE Q3 AND CONTINUES STRONG FOR Q4.

    The Intel year over year "flat" sales reported for Q4 last week supports this hypothesis. Yet Ashraf sees it ONLY through an Intel lens and discounts the 18%+ of the market that AMD owns that ALSO saw the same improvement...and INCORRECTLY assumes any Intel gain is AMD's pain.

    This is the problem with his pieces on SA or MF. In this case, as will be borne out tomorrow, AMD also saw an improvement in their PC sales and are likely to report an INCREASE from Q4 2012 to Q4 2013...compared to Intel's "flat". In this case, AMD's market share will have actually INCREASED.

    Thus, his article, as with all his other pieces is FUD.

  • Report this Comment On January 20, 2014, at 2:37 PM, Dan67 wrote:

    Fool is fool!

    1. Consoles are nearly double!(more than 7milions). Future is good!

    2. Their deal with Verizon to make low-power servers.

    3. Their deal with Apple in the MacPro.

    4. The Litecoin mining which emptied all AMD R9 for sometime at Newegg ! And all around stores!

    5. Mantle will win over NVDIA!

    6. AMD new products lines are good!

    Finally AMD will beat at least 4cents(at 10cents! or even more ) and revenue will be beaten too! AMD will surpassed 5$/share. All Fool need to cover their shorts before 1/21/2014 or they will be dead!

  • Report this Comment On January 20, 2014, at 4:28 PM, nooobinvestor wrote:

    Ashraf - you stick to your Intel investment, and I'll stick to AMD.

    Intel has traded sideways for 5 years, and will probably trade sideways for another 5 years.

  • Report this Comment On January 21, 2014, at 5:39 AM, tely1 wrote:

    If you are so sure, put your money where your mouth is. Post your short option value.

    Guess we will all find out in less than 12 hours.

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