A Year AMD Won't Soon Forget: Fool by Numbers
By
Anders Bylund (TMF Zahrim)
January 18, 2008
|
On Jan. 17, processor peddler Advanced Micro Devices (NYSE: AMD) released earnings for the 2007 fiscal year, which ended Dec. 29.
- Back out noncash goodwill impairment charges of $1.61 billion in the fourth quarter and ... well, 2007 still doesn't look good. Sans that massive item, the operating margin for the year was around (21%), and the net margin would be (29.4%).
- A $614 million investment from a Dubai-based investor group helped stabilize the balance sheet, though AMD had to dilute the stock to meet its end of the bargain. And a heavy debt load still hangs over the company like the sword over Damocles.
- On the bright side, AMD had $114 million of positive operating cash flow in the fourth quarter and came within $9 million of breaking even on a non-GAAP operating basis.
(Figures in millions, except per-share data. Data uses the latest reported numbers from Capital IQ, a division of Standard & Poor's.)
Income Statement Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Sales
|
$6,013
|
$5,649
|
6.4%
|
|
Net Profit
|
($3,379)
|
($166)
|
(1,935%)
|
|
Earnings Per Share
|
($6.06)
|
($0.34)
|
(1,682%)
|
|
Diluted Shares
|
558
|
492
|
13.4%
|
Get back to basics with the income statement.
Margin Checkup
|
FY 2007
|
FY 2006
|
Change*
|
|
Gross Margin
|
37.6%
|
50.0%
|
(12.4)
|
|
Operating Margin
|
(47.7%)
|
7.6%
|
(55.3)
|
|
Net Margin
|
(56.2%)
|
(2.9%)
|
(53.3)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
FY 2007
|
FY 2006
|
Change
|
|
Cash Plus Short-Term Investments
|
$1,889
|
$1,541
|
22.6%
|
|
Accounts Receivable
|
$640
|
$1,140
|
(43.9%)
|
|
Inventory
|
$821
|
$814
|
0.9%
|
|
Liabilities
|
FY 2007
|
FY 2006
|
Change
|
|
Accounts Payable
|
$1,009
|
$1,338
|
(24.6%)
|
|
Long-Term Debt
|
$5,031
|
$3,672
|
37.0%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Cash From Operations
|
($257)
|
$1,287
|
N/A
|
|
Capital Expenditures
|
$1,686
|
$1,856
|
(9.2%)
|
|
Free Cash Flow
|
($1,943)
|
($569)
|
(241.5%)
|
|
Owner Earnings
|
($2,356)
|
($1,231)
|
(91.4%)
|
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Intel (Nasdaq: INTC)
|
$113,490
|
16.5
|
****
|
|
Texas
Instruments (NYSE: TXN)
|
$41,470
|
17.0
|
****
|
|
NVIDIA (Nasdaq: NVDA)
|
$13,780
|
21.6
|
*****
|
|
Broadcom (Nasdaq: BRCM)
|
$12,770
|
81.70
|
***
|
|
AMD
|
$3,910
|
NA
|
**
|
Keep your partners close and the competition in your vest pocket.
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