What to Expect From AMD Earnings

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Shares of semiconductor underdog Advanced Micro Devices (NYSE: AMD  ) defied doubters (and gravity) over the last year.

But as we head into a new year, filled with fresh expectations, the question invariably facing AMD is, can AMD do it again? And, thankfully, Investors should get some much-needed insight into AMD's prospects when it reports its Q4 2013 earnings after the bell today.

Lack of clarity
Unfortunately, the investment outlook for AMD is about as hazy as they come.

On one hand, AMD's business remains frustratingly tied to the global PC market, a market that endured perhaps its worst year ever in 2013. For the full year, the PC market shrank 10% last year, and fared only slightly better during the fourth quarter for which AMD will be reporting today.

On the other hand, AMD does have at least one potential high-profile growth driver working in its favor: new consoles. AMD's graphics processors feature prominently in both Microsoft's new Xbox One and Sony's PlayStation 4, both of which should continue to sell well in the year to come.

In the video below, tech and telecom analyst Andrew Tonner discusses several key numbers and story lines that investors should be on the lookout for when AMD reports later today.

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  • Report this Comment On January 21, 2014, at 1:13 PM, KenLuskin wrote:

    Prepared by Ken Luskin KenLuskin@gmail.com January 8, 2014

    AMD EARNINGS ESTIMATES for Q4 2013

    Methodology:

    Analysis of the sales and profits will be estimated for each business line. AMD had only 2 reporting divisions in Q3, Computing Solutions (CS) and Graphics and Visual Solutions (GVS). But there are 4 separate business lines: Console chips and Discrete GPUs within GVS, PC chips and Server division within CS.

    1) PC chips:

    I

    n early December the Context research firm reported that for the first 2 months of Q4, EU sales of Laptops with AMD APUs were UP 10% year over year, and that AMD had gained market share to 18% from 14%, while the entire EU laptop market was down 12%. Context also reported that for the first 2 months of Q4, the desktop market as a whole was up 5% year over year. In early January Digitimes

    reported that TSMC received “pull in orders” related to PC components for late

    January due low channel inventory. The Digitimes report is a good sign that December PC sales were stronger than expected. Together, these 2 reports echo what other sources have been reporting about the global PC market in Q4= better than the general expectation, and AMD own expectations.

    Based upon the 2 reports of actual PC sales and AMD Laptop sales in Europe, I believe AMD PC chip sales increased about 5% year over year in Q4

    = $33 million increase in sales, with about 10% net profit margins= an $3.3 million increase in profits over Q3.

    2) Server & Server chips:

    AMD and Verizon announced in early October that new Verizon deployme

    nts of AMD’s SeaMicro servers would be only be using AMD Opteron chips rather than Intel server chips. Although Verizon appears to be AMD’s

    largest individual server customer, VP Lisu Su said AMD could not discuss other AMD server customers deals that are similar to the Verizon deal. Total CS sales were $790 million in Q3, with appx. $150 million of that amount accounted for by the Server division, and the remaining $640 million accounted for by the PC division.

    Even though the Verizon deal would indicated an uptick in AMD Server chip sales in Q4,

    I estimate sales increased about 10% over Q3 = $15 million, with about 15% net profits= a $2 million increase in profits over Q3.

    3) Console chips :

    It is my understanding that Console chips are being sold at about $100 each. Based upon the $350 million increase in GVS sales from Q2 to Q3,

    I estimate that AMD sold appx. 3.5 million server chips in Q3. MSFT and Sony have announced total sales of about 7.2 million consoles in Q4, and are still sold out. I estimate that total quarterly sales will be at least 6 million going forward for the first 3 quarters of 2014. Since the Sony and MSFT factories will be producing about 2 million consoles a month, and it takes about 2 weeks for consoles to travel from the factory to the store, there is a need for about 2 million console chips in inventory at MSFT and SONY. Some of the chips that AMD ships are always in the factory, and some are always in transit. Since it takes about 2 weeks of total transit there is always about 1 million ships in consoles that are in transit from the factory to the stores. There are also about 1 million chips that are in transit from AMD to the factories, and in the factories as the consoles are being built and tested. Since the total Consoles sold in Q4 was 7.2 million, and appx. 2 million must be somewhere in the factories or logistics at any time, that means the total number of chips required at the end of Q4 was about 9.2 million. Because AMD shipped about 3.5 million chips in Q3, we subtract that amount from the 9.2 million to arrive at 5.7 million chips shipped from AMD in Q4. 5.7 million console chips shipped in Q4 at $100 = $570 million Since the CFO said that

    margins at AMD’s packaging

    and testing plants had improved substantially since Q3, and the foundry yields should have improved after the initial launch, I am estimating that NET profit margin improved from about 15% to 17% in Q4. $570 million X 17%= $97 million Since Q3 was about $350 million X 15%= $52.5 million Therefore:

    Q4 Console chips sales are about $220 million greater than Q3

    Q4 console chip NET profits are about $ $44 million greater than Q3

    4) Discrete GPUs

    Discrete GPU is part professional and mostly retail. The largest margins in the professional GPUs , which can be over 70% gross and 30% NET profits. The next largest margins in the high end retail GPUs, which are over 50% gross, and over 20% in NET profits.

    AMD had been growing their share of the professional GPU market throughout 2013, culminating in the shipment of 2 professional semi-custom GPUs for each Apple Mac Pro.

    AMD saw a surge in demand for their high end retail GPUs based upon a new release in early Q4 that produced similar performance as the much higher priced Nvidia GPUs.

    Of the $320 million in Q2 discrete GPU sales, about $15 million was in the form of royalties from Microsoft. Professional GPU sales in Q2 were about $50 million, leaving retail discrete GPU sales at about $250 million.

    A)The Apple Mac Pro

    has 2 discrete cards that would sell for about $750 each. Apple received wholesale semi-custom pricing of about 50% below the equivalent pricing, which means that AMD receives about $750 per Mac Pro sold. Unfortunately Apple did not start production until mid December. With most analysts estimating annual sales of about 1.1 million= about 90,000 Mac Pro produced a month. So, if Apple produced 45,000 Mac Pros, and had inventory for about 1 week of production= AMD salels of chips for about 70,000 units.

    70,000 X $750= $ 52 million of additional sales At 30 % NET profit = $ 15 million additional profit

    B)

    high end discrete retail GPUs were sold out in November and December

    This is harder for me to calculate accurately. I estimate the high end GPU gaming demand at about 1 million discrete Add in Boards(AIBs) annually, of which Nvidia was selling more than 2/3 prior to Q4. I believe that in Q4 AMD sold about 2/3 of the high end GPUs because of the better value, and the demand from LiteCoin miners. A one third increase in market share for AMD equals about 80,000 GPUs per quarter at an average price received by AMD of about $300 (there is a retail markup of about 35%)

    80,000 X $300 = $24 million at a 30% NET profit = $ 8 million additional profit

    C) Remainder of discrete GPU: With Q4 PC sales about 5% better than estimated, I am increasing the remaining discrete GPU sales by 5%= $ 12 million, with net profits of about 20%= a $ 2 million increase in profits over Q3

    Therefore: A + B + C = 88 $ million of additional sales

    A + B+ C = $ 22 million of additional NET profits

    TOTALS:

    Computing Solutions

    : Sales of $880 million with $27 million of NET profits

    Graphics and Visual Solutions:

    ADDITIONAL sales of $308 million

    Prepared by Ken Luskin KenLuskin@gmail.com January 8, 2014

    with $ 66 million ADDITIONAL profits= $ 980 million of sales with $ 145 million of NET profits

    ESTIMATED Q4 SALES: $1.83 Billion ESTIMATED Q4 NET INCOME: $ 119 million NET INCOME PER SHARE: $ .155

  • Report this Comment On January 21, 2014, at 1:18 PM, KenLuskin wrote:

    Prepared by Ken Luskin January 17, 2014 KenLuskin@gmail.com

    AMD Q1 GUIDANCE

    PC division

    :

    Based upon seasonality and AMD’s view of the overall demand for PCs, I expect them to

    guide sales down 10% from Q4 2013. Estimated $715 million Q4 sales will be guided down 10% or about $72 million to:

    $643 million revenues with gross margins of 40%= gross profit of $257 million

    Server division

    :

    The server division should have similar sales to Q4

    $165 million revenues with gross margins of 50%= gross profit of $82 million

    Console chip division:

    Because of massive pent up demand for the new consoles, I am estimating Q1 consoles sales of 7 million units for the whole quarter compared to 7.2 million consoles sold in the last 5 weeks of Q4 2013. I had previously estimated that AMD produced 5.7 million chips in Q4 which were all used to meet demand, plus the 3.5 million shipped in Q3. The extra 2 million is because it takes about 2 weeks for consoles to be shipped from the factory to the stores, the chips that are in transit from the Fab to the factories, and at least a one week supply of chips at the factories. So, there will always be about 2 million chips that are in the pipeline. AMD will need to increase production to about 7 million consoles chips in Q1 2014 to meet demand in Q1.

    $700 million revenues with gross margins of 25%= gross profit of $175 million

    Discrete Graphic Division:

    Discrete GPU sales are divided between consumer and professional, with professional margins higher than consumer. There are also royalties from the sale of the Xbox 360, and the WiiU.

    Professional GPU sales

    will benefit from a full quarter of production of the Mac Pro. With an estimated sales of 1.1 million Mac Pros= 275,000 per quarter. Each Mac Pro has 2 AMD discrete GPUs that are estimated to generate revenues of $750 per Mac pro unit sold. 275,000 X $ 750= $206 million plus another $50 million of other professional sales=

    $256 million revenues with gross margins of 50%= gross profit of $128 million

    Consumer GPU sales

    will benefit of a full quarter of demand

    for AMD’s high end GPUs, which

    were sold out in Q4. Also AMD won a majority of the design wins for laptops that will be introduced in Q1. The discrete consumer GPU market is about $700 million in Q1. Since AMD will have at least 50% of this market= $350 million

    $350 million revenues with gross margins of 45%= gross profit of $157 million

    Royalties

    in Q1 will benefit from the Christmas sales in Q4. Royalties are tallied each quarter based upon total sales of the Xbox 360 and the WiiU, but they are not received by AMD until the following quarter. It is estimated that AMD receives about $10 for every unit sold. It is estimated that Xbox 360 sold about 3 million units in Q4 2013, while the WiiU sold about 2 million units. 5 million X $10 = $ 50 million

    $50 million revenues with 100% gross margins= gross profit of $ 50 million

    TOTALS for REVENUES TOTALS for GROSS PROFITS

    PC: $643 million $257 million

    Server: $165 million $82 million

    Console: $700 million $182 million

    Pro GPU: $256 million $128 million

    Consumer GPU: $350 million $157 million Royalties: $50 million $50 million TOTAL REVENUES: $2.16 Billion TOTAL Gross Profit: $856 Million

    Gross profit MARGIN: 39.5% With Operating expense of about $450 million, NET PROFITS= $406 million

    Less interest and taxes of $50 million= $356 million Divided by 765 million share= $.46 EPS

    AMD’s OFFICIAL GUIDANCE: AMD will be overly conservative in their guidance, so they

    can surprise to the upside.

    AMD’s guidance is usually a percentage

    of the last quarter

    ’s revenues

    , with an estimated gross profit, and an estimated operating expense.

    My estimated revenue

    of $2.16 billion is up from my estimated $1.83 billion in Q4 = 18% Increase.

    AMD OFFICIAL

    Revenue guidance

    will probably be for up 5%

    ,

    similar to what they forecast for Q4.

    AMD OFFICIAL

    Gross profit guidance

    will also be conservative, and will be for about 37% gross profit

    AMD OFFICIAL Operating Expense will be probably be for about the same $450 million target of Q4.

  • Report this Comment On January 21, 2014, at 1:25 PM, KenLuskin wrote:

    Prepared by Ken Luskin January 6, 2014

    AMD analysis 2014 to 2017

    Console division

    1) Naysayers are being proven wrong as demand for game consoles is powerful: People LOVE to play AAA video games. There is an entire generation of children that LOVE to play mobile games on the smart phones their "hovering" parents buy to keep tabs on them. Most of these "kids" will want game Consoles and/or PCs to play AAA games. AAA games are much more immersive than cheapo mobile games. Console and PC graphics are TEN times more powerful than hand held. 2) Estimating annual sales: People who bought 100 million Nintendo Wii over a few year period, are now going to buy either the Xbox 1 or PS4. AMD has a GPU in the WiiU so any sales still help AMD. From 2006 through 2012 there were about 260 million consoles sold. About 80 million each for Xbox 360 and PS3, with about 100 million Wiis 2013 is the transition year, so it is not fair to count. Xbox1 and PS4 are not even able to meet the demand. 3) 260 million total consoles sold over a 7 year period = an average of 37 million per year. The peak console sale year was in the 3rd year after launch. When over 40 million a year were being sold. During this entire period consoles were banned in CHINA, the most populous country on earth, with over 4 times the population in the US. 4) AMD agrees with IDC number of 40 million consoles being sold in 2014, with ALL of them except the PS3 bringing either royalties or sales and profits to AMD. It is highly doubtful that PS3 will sell more than what they sold in 2013= 10 million, which means AMD will EARN profits on at LEAST 30 million consoles in 2014. CHINA is the wild card that could push the MINIMUM 30 MILLION number UP dramatically. 5) But, until sales actually start in CHINA a very conservative estimate of AMD chips or royalties will be on at LEAST 30 million units. 6) Yield and therefore profits are at the LOWEST in the

    first quarter of a ramp. Therefore AMD will see increasing profitability on the new console APUs. 7) Since AMD did NOT argue with a 20% NET profit, (NOT gross but NET) for console chips in 2014 the calculation is easy. 30 million X $100= 3 billion X 20%= $600 million 8) Therefore AMD will earn a NET profit of at least $600 million from the console sales and royalties in 2014. Of course the sales figure could be slightly lower, because AMD only gets royalties on the sale of the Xbox 360.

    9) I firmly believe that if the Chinese govt. goes back on their PROMISE to allow Console sales there will be mass riots. Therefore, for 2015 I am including an estimate of console sales in China. 10) There are about 1.4 billion people in China. The top 20% have incomes that are similar to the average American. Therefore, there are about 280 million Chinese that have the ability to purchase a Console for their whole family. The sales of about 24 million $750 NON subsidized iPhones in China in 2013, proves that substantial purchasing power exists for high end consumer electronics. Analysts are estimating that that the largest mobile carrier will offer the iPhone in 2014, and total sales will increase to at least 40 million NON subsidized $700 iPhones. 11) If only half of the people who can buy an iPhone for their own personal use decided to purchase a game console for their household, that equals about 20 million consoles. US consoles sales are about half of the world total. So, since the Chinese market of the top 20% = the US, it makes sense that there would be at least an equal amount of consoles sold. The sales in 2015 could be dramatically higher since there is huge pent up demand because of the 14 year ban on sales. 12) By 2015 Sony will probably NOT be selling the PS3, which means that ALL console sales will generate sales and profits/royalties for AMD. 13) Using 40 million for NON China plus at least 20 million console sold in China= 60 MILLION total 14) 60 million X $90= $5.4 billion X 20% = $ 1.08 BILLION NET profits in 2015

    Discrete GPU division

    1) There is more than a HALO effect from AMD's dominance of the Console chip business, there is a SOFTWARE driven advantage to AMD from the OPTIMIZATION provided by ALL developers of AAA games. AAA game developers create almost ALL their games for the Consoles first and then PORT them over for PCs. 2) Developers like that every Console is the same, whereas there are so many different PC configurations owned by people. Therefore, most ALL games are OPTIMIZED for the console architecture, and then ported over to PCs later. 3) BOTH the Xbox1 and PS4 have APIs that are similar to the MANTLE API that AMD created for PCs. These APIs allow developers to send code directly to GPU portion of the AMD APU, rather than thru the CPU first.

    4) Since the CPU is running at about 4GHz and the GPU is running at about 1GHz, the CPU is frequently "waiting" on the GPU. Sending instructions directly to the GPU is much more efficient, and reduces the demands upon the CPU. In the OXIDE demo shown on Youtube, using the AMD MANTLE API allowed the CPU to be "DOWN CLOCKED" from 4 GHz to 2GHz, withOUT any degradation. 5) This info was shown to PC Laptop OEMs, and the result is that AMD has enough DESIGN WINS for 2014 to take at least 50% discrete GPU market share. This info was presented by AMD's VP of sales at the Raymond James conference on Dec. 10 2013. 6) In 2014 consumer gamers who buy discrete GPU add in boards (AIBs), will come to understand what the PC laptop OEMs already know concerning the advantages of AMDs' discrete GPUs because of the MANTLE API and the OPTIMIZATION of ALL AAA games for AMD GPUs. 7) Therefore, even if the demand from Litecoin miners falls off, consumer gamers will be greatly favoring AMD discrete GPU add in boards in 2014. 8) Additionally, when consumer gamers learn that PCs with AMD GPUs outperform PCs with Nvidia GPUs, sales will be greatly skewed toward AMD!!!! 9) The consumer discrete GPU market is about $3 billion annually. 10) Gross margin at the high end are extremely high, well over 50%. 11) The performance advantage that AMD GPUs has allowed AMD to gain more than 50% of the Laptop design wins without severe discounting. Therefore AMD will receive at least $1.5 billion in revenues from sales of discrete consumer GPUs in 2014. With a gross margin of about 50%= $750 million of gross profit in 2014 12) The professional discrete GPU market has even HIGHER Gross margins than the high end consumer GPU market. 13) The new Apple MAC Pro is now a Work station, rather than a high end PC. With 2 AMD semi-custom GPUs in each MAC Pro, AMD's share of the professional GPU market will skyrocket. Analysts estimate that Apple will sell over 1 Million MAC Pros in 2014. 14) With tear downs estimating the replacement value of the 2 GPUs in the MAC Pro at appx. $1,200 in the entry model, AMD will be receiving at least $500 per every MAC Pro sold = $500 million in 2014 revenues. With gross margins of at least 50%= $250 million of gross profit in 2014 15) TOTAL discrete GPU sales will be at least $2 billion in 2014, with Gross profit from discrete GPUs in 2014 of about $1 billion.

    16) AMD was breaking even in Q2 on about $300 million of discrete sales at 50% gross margin, which means all expenses were about $150 million for the discrete GPU business= ~ $600 million annually 17) Subtracting $600 million of expenses from $1 billion of gross profits= $400 million of NET profits from Discrete GPU sales in 2014. 18) 2015 should be similar to 2014 for discrete graphics.

    Server division

    1) Industry analysts estimate the SERVER chip industry total sales of about $11 billion in 2013, growing to about $15 billion in 2017. 2) Since AMD only had about 4.5% market share of the sever chip business in 2013= $500 million revenues in 2013. The SeaMicro server business (NON chip) probably had about $100 million of revenues in 2013 bringing the total to about $600 million. The Server chip and SeaMicro business are part of the reporting division called Computing solutions (CS). 3)

    High-density architectures in the data center are gaining popularity in large part because the data center itself is changing

    from the enterprise-based entity of yesterday to the cloud-facing

    architectures of tomorrow.”

    Micro servers are an emerging form factor of servers designed to process low intensive workloads like lightweight web serving; simple content delivery nodes and low end dedicated hosting. They are basically low power servers consisting of several nodes that share a common architecture. Increasing demand for servers in data center due to the explosive growth of data usage among customers and the power usage of the traditional servers even when they are in idle mode makes them ineffective cost-wise. However the stringent requirement of maintaining 99.99% uptime of the websites or data availability makes these costs necessary. Micro servers were developed as a cost effective solution to this dilemma faced by servers industry. This have an extraordinary dense and power saving design in which fans and power supply are shared by tens or potentially, hundreds of server nodes. This efficiency leads to the elimination of space and power consumption of redundant components. It presently costs up to 63 percent less than the conventional servers.

    AMD’s

    SeaMicro is the pioneer in using low power server chips that are strung tightly together using its proprietary Freedom Fabric. Lower power chips reduce electricity costs, both for processing and cooling. 4) Industry analysts estimate that Cloud computing application will grow at a phenomenal CAGR of 62.3% from 2013 to 2018. 5) AMD's SeaMicro and the creation of an ARM 64 bit Sever chip are directed at the 62.3% growth in demand from Cloud computing.

    6) AMD believes they will have 20% to 25% of the server chip market by 2017. Since the largest part of the estimated growth for server chips will come from Cloud computing AMD's market share could be even larger than their PUBLICLY announced target. 7) The huge growth in AMD's Server division will start in Q3 2014 when AMD's ARM 64 bit chips are in full production. 8) 20% of the $15 billion server chip market in 2017= $3 billion Server chips will become increasingly larger % of the total cost of a server, as servers become increasingly dense, and rely upon SoC chips and Fabrics rather than large numbers of cheap individual servers. 9) Sales of the SeaMicro servers are in addition to the server chip market. IC Insights forecasts that worldwide microserver sales will grow 139 percent in 2014 to $580 million from an estimated $243 million in 2013. Between 2012 and 2017, microserver sales are projected to rise nearly 72 percent per year on average to total $1.2 billion in 2017. 10)

    “The companies that make servers fee

    l that they had it good when they had a choice, and

    they’re eager to have one again.”

    Intel currently has 95% of the server chip market. As the emphasis shifts from total CPU compute power, to compute power per watt, AMD SeaMicro using low power AMD ARM 64 bit chips will greatly increase server chip market share.

    11) Re/Code: “

    The main reason that ARM chips dominate the mobile phone business is that

    they’re designed to consume power efficiently in order to preserve battery life. That same

    power-sipping capability is what makes ARM chips attractive for servers. As data centers operated by companies like Google, Facebook, Amazon and many others pack thousands of machines into ever more dense spaces, the cost of power to keep them running has quickly r

    isen to the top of the list of things those companies worry about. Add to that Intel’s ability to

    charge relatively high prices for Xeon chips, and t

    he potential appeal only grows.”

    12) Re/Code:

    The one thing that ARM chips have lacked until recently is a 64-bit core design.

    Without that, the chips can’t work with the amount of memory typically required in a server. Intel

    and AMD chips have had 64-

    bit chips for about a decade. ARM didn’t release its first 64

    -bit design until 2011, and the first one to wi

    nd up in a smartphone was Apple’s A7, in the latest

    iPhones and iPads. 13) While Samsung and Qualcomm are both powerhouses in the design of chips for phones, neither has ever built a general-purpose microprocessor. AMD, which has a long history of building x86 chips for PCs and servers, has that expertise.

    “If AMD were to take out the relevant ARM licenses, it could potentially be a very potent force,” Moorhead said. “AMD knows how to build processors, and it has the respect of HP and Dell and all the other vendors.”

    14) From public comments by AMD officials about VERIZON being the first of the data center deals they can discuss, to the constant hints from AMD server chief Andrew Feldman about Amazon, Facebook , Baidu, it is highly likely that AMD already has built-in customers for the ARM 64 bit sever chips, that will be used in SeaMicro servers, or in the custom servers being built at the large cloud providers. 15) Based upon the DEMAND for lower power server chips, and the DEMAND for an alternative to Intel from the large Cloud providers, it is highly likely that AMD will have success in increasing market share in the Server chip space. 16) A straight line increase from a $600 million run rate for AMDs' server division to $3.5 billion in 2017 would imply an increase to about $1.5 billion in sales in 2015 and $2.5 billion in 2016. 17) Since AMD will be primarily be competing against Intel's huge profit margins in the server chip space, I believe they will be able to earn 50% gross margins. 18) Therefore, I am factoring in a $200 million increase in AMD's server division in the 2nd half of 2014 with 50% gross margins. 19) Wall st will be relatively skeptical of AMD's server growth until the CLOUD deals with Amazon, Facebook, Baidu, etc are made public. CONCLUSION: AMD's server division will have tremendous growth starting in Q3 2014 (when the AMD 64 bit ARM chip is in full production), with gross profits growing from $100 million a quarter to annual rate of $ ONE BILLION in 2015, $1.5 billion in 2016, and $2 billion in 2017. The HUGE growth in Cloud computing, and Semi-custom deals with the largest Cloud players, will result in AMD's PE exploding to mirror the Cloud industry.

    PC division

    1) AMD's PC divison is part of the reporting segment called Computing Solutions (CS), which had a total of $790 million in Q3 sales. Since CS also houses the server division, with estimated Q3 sales of about $150 million, the PC chip division sales for Q3 were about $640 million. 2) AMD's strategy for the PC chip division has been to emphasize their GRAPHIC superiority by focusing on APUs, rather than CPU only chips. AMD is trying to carve out a powerful and growing niche that empowers devices with better graphics than their competitor at a lower price. While AMD had some success with Laptop chips in 2013, they will be emphasizing Desktop

    chips in 2014. This is a brilliant strategy to emphasize GPU intensive functions that will set AMD powered machines apart from their competitors. 3) While AMD is NOT relying upon the PC division for growth, the entire category will be about 300 million units in 2014, and PC OEMs want to support AMD as an offset to being totally reliant upon Intel. 4) For NON technical functions, current generation CPUs are more than fast and powerful enough for most people. But, what most people desire is more GRAPHICAL abilities. AMD will continue increasing the GPU power of its APUs in 2014 and 2015. 5) People are increasingly interested in using high powered GRAPHICAL power for all kinds of applications, with AAA video gaming at the top of the list. 6) AMD will maintain its overall market share in PCs by emphasizing the superior AAA gaming experience from AMD PCs. The MANTLE API reduces the need for a super powerful Intel CPU, which will tip the balance towards AMD. 7) AMD will use its PC division innovations in producing more powerful APUs to create semi-custom chip deals for various industrial applications, from Casino gambling equipment, industrial automation, medical imaging, aerospace and automotive. 8) AMD has been able to successfully reduce operating expenses in the PC division, such that the entire CS reporting division reported a $22 million profit, even though revenues fell by 6% from the previous quarter. 9) AMD's top of the line APUs have equal GRAHICS to an Intel Integrated Graphic chip that costs more than 4 times as much. AMD will use the fact that ALL new AAA games are optimized for AMD graphics to increase their share of the entry level consumer desk top market. 10) AMD will let Intel damage itself doing battle with low power ARM chips in the tablet space, while AMD focuses on semi-custom deals that require AMD's GRAPHICAL abilities in a low power APU. CONCLUSION: AMD may be able to produce profits in the PC division by focusing upon their domination of the AAA gaming space. That said, I will simply forecast that the PC division will have flat to slightly lower sales and break even in both 2014 and 2015.

    1) CONSOLES:

    2014 sales $3 BILLION NET profits $600 million 2015 sales $5.4 BILLION NET profits $1.08 Billion 2016 sales $5.4 BILLION NET profits $1.08 Billion 2017 sales $4.8 BILLION NET profits of $ 960 million

    2) DISCRETE GPUs

    2014 sales $2 BILLION NET profits $400 million 2015 sales $2 BILLION NET profits $400 million 2016 sales $ 2 BILLION NET profits $400 million 2017 sales $ 2 BILLION NET profits $400 million 3)

    3) SERVER division

    2014 sales $850 MILLION NET profits $200 million 2015 sales $ 1.5 BILLION NET profits $500 million 2016 sales $2.5 BILLION NET profits $800 million 2017 sales $3.5 BILLION NET profits $1 BILLION

    4) PC Divison

    2014 sales $2.5 Billion NET profits ZERO

    2015 sales $2.25 Billion NET profits ZERO

    2016 sales $2 BILLION NET profits ZERO

    2017 sales $2 BILLION NET profits ZERO

    TOTAL: 2014 sales $ 8.35 BILLION NET profits $1.2 BILLION

    2015 sales $ 11.15 BILLION NET profits $ 2 BILLION

    2016 sales $ 11.9 BILLION NET profits $ 2.3 BILLION

    2017 sales $ 12.3 BILLION NET profits $ 2.4 BILLION

    DEBT REDUCTION will eliminate net interest costs after 2015 Additional SEMI CUSTOM design wins will create additional revenues and profits NOT included!!!

  • Report this Comment On January 26, 2014, at 6:37 PM, smallormidcapman wrote:

    @ Ken Luskin

    I have never seen anyone so monumentally wrong in my entire life...EVER.

    Q4 2013

    ~ 1.86 billion vs 1.59 billion actual

    ~ $880 million vs $722 million actual

    ~ .155 EPS vs .06 EPS actual

    Q1 2014 Guidance

    ~ Up 5% revenue vs DOWN 16% revenue

    ~ $2.16 billion revenue vs $1.34 billion...LMFAO

    ~ .46 EPS vs .01 EPS guidance

    You were WRONG by $820 MILLION in revenue

    You were WRONG by 460% on EPS....LMFAO

    I see you took down your documents from scribd...I sent a copy to the SEC for their information. You are either stupid or were short...if you were short...ruh roh.

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