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Hardware AMD Posts Another Massive Quarterly Loss
Shane McGlaun (Blog) - April 22, 2009 10:53 AM

58 comment(s) - last by Goty.. on Apr 24 at 11:37 PM

AMD says the industry hasn't hit bottom

Things keep getting worse for AMD as it tries to turn itself around and return to its former profitability. The world's second largest chipmaker announced its Q1 2009 financials yesterday and posted a large loss and falls in share prices.

AMD said that the company lost $416 million in the previous quarter amounting to a loss of 66 cents per share. Yahoo Tech reports that the loss per share was a bit better than Wall Street expected. One-time charges relating to the spinoff of AMD's foundry operations into a new company now called GlobalFoundries accounted for some of the loss.

The one-time charge for the spin off was $195 million. Without that charge, the loss per share would have been 62 cents. Factoring out the onetime charge, the loss was 4 cents per share under the 66 cent per share loss expected by analysts.

AMD sales overall dropped 21% to $1.18 billion, higher than the expected $978 million. AMD told analysts that it expected sales in Q2 to drop, a contrast to rival Intel who expects sales to increase in Q2. Yahoo Tech expects AMD sales in Q2 to be around $975 million, down 28% from Q2 208 sales of $1.35 billion.

AMD CEO Dirk Meyer said, "The economy is still weak, making it very difficult to forecast end-user demand. I've heard some say we've hit bottom. I don't know how someone could say we've hit bottom in the current economic climate."

Meyer is referring to Intel reporting that it believes that the industry has hit the bottom and demand along with sales will increase in Q2. AMD also reported that it had sold fewer processors and that the overall price of the processors it did sell were down.

Sales of AMD GPUs were down, but the price of the GPUs sold was up. GPU sales fell 15% for the quarter with $222 million in sales. The purchase of ATI continues to be a major source of lost profit for AMD.

AMD reported a gross profit margin for the quarter of 35%, 5% less than analysts expected.

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It would be a shame...

By AEvangel on 4/22/2009 10:59:47 AM , Rating: 3

It would be a shame if AMD failed, but if you can't make a competitive product then I guess this is your fate.

RE: It would be a shame...

By 1frisbee1 on 4/22/2009 11:04:18 AM , Rating: 1

They just don't seem to have a reliable response to Atom, which may be decimating the laptop industry but seems to be the ideal market in a down economy.

Do we really want Intel with a monopoly?

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RE: It would be a shame...

By Elementalism on 4/22/2009 3:36:19 PM , Rating: 2

No we dont want an Intel monopoly and I am wondering wtf is going on at AMD. They didnt have a clue how to deal with Core 2 Duo and now Atom is cleaning their clock. With our luck Larrabee will be a performance champ and kick AMD's ass in that arena as well.

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RE: It would be a shame...

By phxfreddy on 4/22/2009 11:05:17 AM , Rating: 1

They sure could have played their business cards better. ( not literally their business-cards...the cards they were dealt in business )

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RE: It would be a shame...

By randomposter on 4/22/2009 11:11:37 AM , Rating: 1

Your business card is crap.

http://www.youtube.com/watch?v=4YBxeDN4tbk

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RE: It would be a shame...

By phxfreddy on 4/22/2009 2:17:03 PM , Rating: 2

... sure are getting alot of really mother fudging weird posters on here to wit: RandomPoster et al.

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RE: It would be a shame...

By phxfreddy on 4/22/09, Rating: -1

RE: It would be a shame...

By randomposter on 4/22/2009 3:10:02 PM , Rating: 2

Attention phxfreddy: humor - look it up sometime

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RE: It would be a shame...

By Goty on 4/22/2009 11:20:41 AM , Rating: 2

I guess it's good that they do make competitive products, then (just not at the high end =P)

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RE: It would be a shame...

By TomZ on 4/22/2009 1:25:09 PM , Rating: 3

If you say so...but if you look at what both companies are telling you, AMD expects their sales to decrease in Q2 and Intel expects their sales to increase in Q2.

One big hole that AMD has in is netbooks and notebooks, which is where most of the market growth is...and where AMD has no competitive products at all. That alone is probably enough to explain the differing outlooks for Q2.

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RE: It would be a shame...

By Oregonian2 on 4/22/2009 1:55:10 PM , Rating: 2

True, but they at least compete there some, they used to not compete there at all. One problem is that AMD's R&D is tiny compared to Intel's so they need to be a lot tighter focused -- they physically can't have the plethora of products like Intel's and their attention in the graphics direction, however strategic, still didn't help the CPU products by diverting management attention away from it.

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RE: It would be a shame...

By Goty on 4/24/2009 11:37:11 PM , Rating: 2

Why would AMD try to compete in the netbook market when there are already two companies with fully-developed solutions for the platform? It wouldn't be a wise investment. AMD has already stated that they're shooting for the region between true ultraportables and the cheap laptop space - an area that neither Intel nor Via are actively targeting.

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RE: It would be a shame...

By tallcool1 on 4/22/09, Rating: -1

RE: It would be a shame...

By bill3 on 4/22/2009 7:50:35 PM , Rating: 3

I like how people complain about the auto industry but dont complain about the banks and other companies that are getting 10,000 more times the money Chrysler/GM are.

It really makes a lot of sense.

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RE: It would be a shame...

By omnicronx on 4/22/2009 11:45:25 AM , Rating: 2

If only a competitive product was a requisite for success these days. ATI is still losing money even though they have some pretty good video cards out right now with competitive pricing, including better price/performance than Nvidia.

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RE: It would be a shame...

By just4U on 4/22/2009 8:26:00 PM , Rating: 2

Not only that but the Phenom2 is quite the nice cpu. I don't see a reason to even look at Dual cores over $100 as long as the 710/20 are kicking about.

People complain that for Amd it's to little to late but it's not like everyone's jumping all over those 3 I7 proccessors. The bulk seems to still be going to the 7,8, & and 9X devisions and that's where Amd's got a nice lineup right now.

I think they have a really strong lineup right now in both their CPU and GPU devisions.

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RE: It would be a shame...

By yxalitis on 4/22/2009 10:37:15 PM , Rating: 2

ATI is making money, lots of it, its one of AMD most profitable divisions...it's the accounting mumbo jumbo "cost of acquisition" that "costs" them

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RE: It would be a shame...

By Hiawa23 on 4/22/2009 4:55:26 PM , Rating: 2

I may be looking at this wrong but if PC sales are down, less demand, less sales & the economy is in such a bad place, wouldn't the chipmakers or anyone associated with this industry also be hurting? I guess I am not surprised, here unless there are other factors contributing to their ills.

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RE: It would be a shame...

By melgross on 4/23/2009 2:15:46 AM , Rating: 2

If Intel is taking more of AMD's marketshare, then they might not be hurting all that much, while AMD is dying.

As has been noticed, Intel is predicting a better quarter, while AMD is predicting a worse one.

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I'm surprised....

By EasyC on 4/22/2009 12:18:38 PM , Rating: 2

That VIA hasn't become a better contender. The new Nano series processors destroy the Atom in power. I run a Nano 1.6Ghz in my carputer with 2GBs of ram and Vista boots quickly and runs perfectly.

RE: I'm surprised....

By Bateluer on 4/22/2009 12:51:59 PM , Rating: 2

Very few design wins for the Nano, allegedly because Intel provides 'incentives' for OEMs to purchase Intel chips. AMD has experiences this trying to move their CPUs and products as well.

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RE: I'm surprised....

By AstroCreep on 4/22/2009 7:05:27 PM , Rating: 2

quote:
allegedly because Intel provides 'incentives' for OEMs to purchase Intel chips.

Hmmm...where have I heard that before? ;)

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RE: I'm surprised....

By TomZ on 4/22/2009 1:44:31 PM , Rating: 2

quote:
The new Nano series processors destroy the Atom in power.

That's only true if you mate the Atom with a power-hungry chipset. If you compare the Atom processor itself to the Nano, the Atom destroys the Nano in terms of performance per watt.

You can see it here: http://arstechnica.com/hardware/reviews/2008/07/at...

Going from idle to full load, the Atom platform's power increases +6W, compared to the Nano which increases +19W. And while the Atom is a bit slower than the Nano, the Nano is not even close to 3X faster.

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RE: I'm surprised....

By Hyperion1400 on 4/22/2009 4:25:48 PM , Rating: 1

That's not the point. The point, is that Intel HAS paired Atom with a very ungainly chipset, and last time I checked, computers can't run on CPUs alone. The system as a whole is what you should be using for comparison purposes, not just the CPUs. In terms of over-all PPW, Nano roles up Atom and smokes it like a joint while only consuming a few more watts of power.

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RE: I'm surprised....

By TomZ on 4/22/2009 4:47:42 PM , Rating: 2

I understand what you're saying, but the OP stated, "The new Nano series processors destroy the Atom in power." That is a focus on the processor, not the platform.

Why the focus on processor? Because with Moorsetown slated to be out later this year, the total Atom platform power consumption is reduced far below the VIA chip, and the performance will be increased past VIA as well. Game over for VIA.

http://en.wikipedia.org/wiki/Moorestown_(CPU)

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RE: I'm surprised....

By sprockkets on 4/22/2009 5:05:05 PM , Rating: 2

It's a x86 phone chip, not a computer platform. It won't have any features useful to home computers such as pci express and SATA.

When you compare Atom as a desktop chip, it isn't that great, and really, it wasn't the reason why Intel made it in the first place.

So, yes, my point still stands: You skewed the facts when comparing the Nano and Atom from your own source.

Oh, and just to show I'm not biased, I would buy the Atom platform anyhow since the new board is $120 and has DVI, and there is no dual core Nano out. And if I need more power, a Zotac nVidia 9300 mini-ITX board is what I would get. At least the Via board has a 16x pci-e slot, but at that point I would just get the Zotac board.

Of course, if Nano gets the Ion platform first, consider my choices revised.

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RE: I'm surprised....

By sprockkets on 4/22/2009 4:33:06 PM , Rating: 2

You are skewing the facts quite a bit.

Not sure how you say it "destroys" the Nano, when the Atom takes 7 more watts at idle more than the Nano to begin with, and the Nano takes only 6 more watts than the Atom on load. And through most of the bench marks, it clearly justifies taking 6 watts more energy, beating the atom by around 33-50% on most benchmarks.

Also, comparing a 65nm chip to a 45nm chip and saying the 45nm atom is more efficient because it is a better architecture is ridiculous. In the end it doesn't matter since Intel is the king of manufacturing chips, but still, if it takes a smaller process to win, I feel Via is better. Of course, Via does not intend this chip to go in MIDs.

Now, the dual core atom is better than a single core Nano, and Via has nothing for that for a while. But, the low power chipsets for atom cannot be paired with the dual core version. Intel's upcoming Atom board will have the low power 945GSE chipset, and built in power supply, but will be single core only. I plan to get one and put a mini pcie ssd on it to make a computer with no moving parts. But, it just won't be as fast as a Nano or dual core Atom board.

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RE: I'm surprised....

By TomZ on 4/22/2009 4:50:53 PM , Rating: 2

See my reply above.

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AMD isn't going anywhere

By TA152H on 4/22/2009 1:10:38 PM , Rating: 3

All this nonsense about AMD falling off the planet is just that. Intel doesn't want them too desperate, since someone like IBM, or Nvidia, might decide to gobble them up. I don't see that being a good thing for Intel at all. Nvidia could, because Intel dominates the market, and I don't think anyone's even remotely afraid of Nvidia and ATI combination being a monopoly. Intel is more than strong enough to offer competition.

The main problem they have is a very bad design. It's the size of the i7, and it performs miserably next to it. It's still a K7 in drag, and they need to make more fundamental changes to it. Now they're saying the Bulldozer is going to be late. It's really bad, they need this processor desperately.

Until the Bulldozer, they are not going to be successful with processors. The i7 will keep coming down in price, as will DDR3, as will the motherboards, particularly when Intel launches lower end chipsets. AMD as a bottom-feeder is a natural and normal situation, but the problem is their bottom-feeding processor is just as big as Intel's. It's not like the days of the K6 and prior where they didn't match performance, but had smaller chips that used less power. Their current chips are just as big, and use more power. I agree with the others on the Atom.

My biggest question for AMD is why they never brought back the K6. For very low power situations, it's a far better processor than the K7 series. It used very little power, and had a very good IPC, and would prove a very competitive product against the much more primitive Atom, especially considering the updates they could do on it to improve it. x87 was the weak spot, but it's obsolete now, so irrelevant.

Instead, they keep trying to make the K8 power efficient, and it naturally comes up short.

RE: AMD isn't going anywhere

By Oregonian2 on 4/22/2009 2:02:17 PM , Rating: 2

If AMD had an answer to the Atom and somehow instantly gained 25% of the market for them, would that be sufficient to make AMD profitable? Not exactly spendy parts.

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RE: AMD isn't going anywhere

By TomZ on 4/22/2009 2:26:59 PM , Rating: 3

That's right. In fact, Atom only accounted for 3% of Intel's revenue last quarter. So while Atom makes sense in the big picture of things, it's not exactly a big cash cow at the moment, nothing that could help AMD out too much.

But the same cannot be said for the bulk of the laptop market. That market is probably 30-40% of Intel's revenue and growing.

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RE: AMD isn't going anywhere

By Iger on 4/23/2009 6:47:26 AM , Rating: 2

Aye-aye... As big fan of AMD as I am, I haven't even considered an AMD-powered laptop since the day Core 2 was released.

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RE: AMD isn't going anywhere

By TA152H on 4/22/2009 2:51:13 PM , Rating: 2

It wouldn't make them profitable, yet, but it's a huge potential market going forward. AMD would also have a better infrastructure, considering the terrible chipset Intel has paired the Atom with, and the excellent IGPs AMD has.

I'm not sure that the whole attitude that they need to fix it right away is so important anyway. They have to be in it for the long haul, and all companies in these industries are. Low-cost commodity processors should grow, not shrink, in demand, and AMD really isn't in any shape to compete in that market. I hope that changes.

By the way 3% of Intel's revenue would be enormous for AMD.

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My most hated companies

By rudolphna on 4/22/2009 4:50:00 PM , Rating: 2

Intel- Anti-competetive "incentives" for OEM Makers

TimeWarner/other US Cable ISPs- Wow.... I dont even know how to put it into words.

RE: My most hated companies

By TomZ on 4/22/2009 4:52:20 PM , Rating: 2

quote:
Intel- Anti-competetive "incentives" for OEM Makers

Where did you learn about this? From some forum post somewhere? Don't believe everything you read on the Internet.

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RE: My most hated companies

By rudolphna on 4/22/2009 5:02:36 PM , Rating: 2

Its a FACT that Intel gives huge incentives for companies like Dell and HP to not use AMD chips. If the company buys AMD or VIA chips, Intel will not give them the discount on their chips. http://news.zdnet.co.uk/hardware/0,1000000091,3920...

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RE: My most hated companies

By TomZ on 4/22/2009 10:59:53 PM , Rating: 2

I think you overlooked the statement in the linked article that said that Intel "stopped the practices."

I highly doubt that Intel is making such payments in order to keep VIA out of the market.

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RE: My most hated companies

By rudolphna on 4/23/2009 7:53:51 AM , Rating: 2

do you really believe that intel has stopped? How do you explain that very few OEMs use AMD chips, and there are minimal selections, 2, 3 maybe from HP and gateway. and how many intel? 15-20. yeah, that seems like it might contribute.

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RE: My most hated companies

By TomZ on 4/23/2009 8:50:06 AM , Rating: 2

Uh, probably because Intel has superior products pretty much across the board, and therefore, as long as Intel can keep their pricing within reason, they're going to dominate the market.

Also working against AMD is the consumer brand recognition and comfort people have with Intel. AMD is more of an unknown.

Intel is in a position to dominate the market without engaging in illegal or possibly illegal payment schemes.

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AMD no longer a chip maker

By energy1man on 4/22/2009 7:53:14 PM , Rating: 3

quote:
The world's second largest chipmaker announced its Q1 2009 financials yesterday and posted a large loss and falls in share prices.

Now that the chip making arm of AMD has been spun off into GlobalFoundries, you can't really say they are the world's second largest chipmaker.

RE: AMD no longer a chip maker

By energy1man on 4/22/2009 9:22:50 PM , Rating: 2

Sorry for the multiple posts. The work computer gave an error message when clicking post comment each time, did not think they got submitted.

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RE: AMD no longer a chip maker

By Eskimo on 4/23/2009 10:08:24 AM , Rating: 2

They never were the 2nd largest chip maker. AMD with global foundries was the 12th largest chip maker in 2008, 10th in 2007. They are only 2nd in microprocessors. Samsung is the 2nd largest chip maker.

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impossible for them to fail?

By poohbear on 4/22/2009 11:51:29 AM , Rating: 2

would'nt the government step in and save AMD to prevent Intel from becoming a monoply?

RE: impossible for them to fail?

By Amiga500 on 4/22/2009 12:01:01 PM , Rating: 2

Doubtful IMO... How many US jobs are <directly dependant on AMD?

But, in the interests of avoiding the monopoly and the lack of competition that would surely force govt computing costs sky high - they might offer an incentive for someone else *cough* IBM *cough* to step in and run them.

In a similar fashion to the Chrysler - FIAT deal.

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RE: impossible for them to fail?

By Oregonian2 on 4/22/2009 1:59:24 PM , Rating: 2

Maybe Germany would bail them out seeing as how the high end processor "main" FABs are in Germany. Although that's now a separate company, AMD is probably their only customer just now, and if AMD went byebye, they'd probably do so soon thereafter.

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Poor AMD

By Elementalism on 4/22/2009 3:34:57 PM , Rating: 2

Made a horrible investment in ATI and got caught with their pants down against Core 2. Talk about a bad combination.

Wonder if Nvidia is eyeing AMD for acquisition?

RE: Poor AMD

By TomZ on 4/22/2009 4:20:31 PM , Rating: 1

quote:
Wonder if Nvidia is eyeing AMD for acquisition?

I don't think that acquisition would be possible, since it would give the combined company a nearly 100% marketshare in GPUs.

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RE: Poor AMD

By just4U on 4/22/2009 8:34:30 PM , Rating: 2

You'd think that would be the case but sadly .. Intel seems to have a very large portion of that market as well. Thanks to that crappy onboard video they peddle to the masses.

As a sidenote I'd really hate seeing Nvidia with a monopoly on the discrete graphic cards as we are all familiar with their pricing practices.

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I like AMD

By phxfreddy on 4/22/2009 10:58:51 AM , Rating: 2

...but the longer this goes on the more it seems they are doomed. Hector Ruiz was a bad choice for Motorola so I thought it was a bad move when AMD picked him up. They did the attempted roll in of ATI but that has not yet paid off and may never.

It is better to have a competitor for Intel but poor AMD appears bled white.

Anyone see a way they survive?

RE: I like AMD

By vignyan on 4/22/09, Rating: -1

RE: I like AMD

By mmcdonalataocdotgov on 4/22/2009 11:17:50 AM , Rating: 3

Bankruptcy protects a person or company from creditors. Just because revenues are down does not mean that there are any creditors who are not getting paid.

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Thoughts

By bill3 on 4/22/2009 8:04:28 PM , Rating: 2

People here keep bringing up the Atom as a great Intel success, but I thought anything that went in a netbook was persona non grata at these companies anyway because by definition it's ultra low margin?

I mean I read MS is giving away the XP netbook licenses for $15. When I see netbooks retailing at 298 at Wal Mart I see why.

So I just doubt Atom is contributing much to Intel no matter it's volumes.

AMD seems to be doing really well in GPU's if you follow that, basically cleaning Nvidias clock with a chip thats 90% as fast at half the size for the last year+. In CPU's it's less rosy they dont have an answer to i7, but theyve gotten better there too the Phenom X2's are at least competitive with Intel's older chips which is an improvement. Still they really need to get on the ball in CPU's. No excuse for how they've fallen so damn far behind in performance.

I dont know, it just seems like AMD is mismanaged because they have pretty good products..

RE: Thoughts

By melgross on 4/23/2009 2:18:54 AM , Rating: 2

Intel couldn't make enough of them the demand was so high.

But it looks as though netbook sales are off.

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AMD no longer a chip maker

By energy1man on 4/22/2009 7:52:28 PM , Rating: 2

quote:
The world's second largest chipmaker announced its Q1 2009 financials yesterday and posted a large loss and falls in share prices.

Now that the chip making arm of AMD has been spun off into GlobalFoundries, you can't really say they are the world's second largest chipmaker.

AMD no longer a chip maker

By energy1man on 4/22/2009 7:52:47 PM , Rating: 2

quote:
The world's second largest chipmaker announced its Q1 2009 financials yesterday and posted a large loss and falls in share prices.

Now that the chip making arm of AMD has been spun off into GlobalFoundries, you can't really say they are the world's second largest chipmaker.

It makes sense...

By triadone on 4/23/2009 3:43:56 AM , Rating: 2

I haven't seen the numbers for nVidia, but it makes sense that the GPU unit would be taking losses in this environment. The money makers are the discrete GPUs for both notebooks and desktops. I'm guessing people are shopping for what they can get by with (integrated GPU) for their systems instead of what they would want ideally (discrete GPUs). That means the bread and butter discrete GPUs aren't selling as AMD needs them to. Everything I've read on AMD's recent GPUs puts them on par or above nVidia in regard to price and performance.