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AMD trims its losses and Microsoft shores up its gains

Advanced Micro Devices, Inc. (AMD) announced its earnings report late yesterday, as did the world's largest operating system maker, Microsoft Corp. (MSFT).

I. Microsoft Gets Boost From Deferred Revenue

Both companies beat analyst estimates.

Despite slowing PC sales and criticisms about its design direction with Windows 8, Microsoft drew revenue of $20.5B USD in its fiscal third quarter -- up from $17.4B USD in 2012's fiscal Q3.  Windows revenue was essentially flat, but was up 23 percent with the inclusion of deferred Windows 8 upgrade income.

Microsoft made $6.06B USD in profit.  While the revenue was roughly in line with a Financial Times survey of 23 analysts, the profit was a bit of a surprise: the surveyed analysts only expected $5.7B USD in profit.

Steve Ballmer w Windows 8
Microsoft posted a bigger-than-expected profit on the back of Windows 8 upgrade revenue.
[Image Source: AFP]

Despite controversy over DRM, Microsoft’s Xbox 360 continues to be a strong revenue driver as part of The Entertainment and Devices Division.  Microsoft is looking ahead to Windows 8.1 (codenamed "Windows Blue") and Windows Phone 8.1, which will launch later this year.

II. AMD: Lower Losses, Big Console Design Wins

AMD saw revenue sag to $1.09B USD, down from $1.59B USD a year before.  But it further trimmed its operating loss to $146M USD, down from a whopping $473M USD in 2012.  That loss was significantly smaller than the $202M USD analysts expected it to post.

Rory Read, AMD president and new CEO comments, "Our first quarter results reflect our disciplined operational execution in a difficult market environment.  We have largely completed our restructuring and are now focused on delivering a powerful set of new products that will accelerate our business in 2013. We will continue to diversify our portfolio and attack high-growth markets like dense server, ultra low-power client, embedded and semi-custom solutions to create the foundation for sustainable financial returns."
 

 
AMD cut nearly 30 percent of its engineering staff in late 2012.  But it also hired on some engineers with mobile experience to boost its prospective entry into the tablet or smartphone space.  AMD has started shipping Richland CPU+GPU chips, which fall in AMD's A-Series branding.

Looking ahead in the longer term, AMD is plotting a switch to ARM Holdings Plc.'s (LON:ARM) proprietary CPU architecture.  In the meantime AMD looks to have strong upcoming sources of revenue thanks to design wins on the PS4 console from Sony Corp. (TYO:6758) which uses AMD GPUs and CPUs, and Microsoft's upcoming Xbox 720, which is expected to use an AMD CPU.   There's currently an AMD 550 MHz Radeon "Latte" GPU aboard Nintendo Comp., Ltd.'s (TYO:7974popular Wii U.

Sources: Microsoft, FT [analyst estimates; MSFT], AMD, FT [analyst estimates; AMD]



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Microsoft's been doing it for years
By Shadowself on 4/19/2013 2:37:59 PM , Rating: 2
quote:
Despite slowing PC sales and criticisms about its design direction with Windows 8, Microsoft drew revenue of $20.5B USD in its fiscal third quarter -- up from $17.4B USD in 2012's fiscal Q3. Windows revenue was essentially flat, but was up 23 percent with the inclusion of deferred Windows 8 upgrade income.

Microsoft made $6.06B USD in profit. While the revenue was roughly in line with a Financial Times survey of 23 analysts, the profit was a bit of a surprise: the surveyed analysts only expected $5.7B USD in profit.
This really should not be a surprise to anyone. Microsoft had been using both "deferred profits" (and another accounting trick known as "contingent liability accounts") to float profits from a good quarter to a lesser quarter since the 1980s. Both techniques are 100% acceptable under GAAP rules and are 100% legal under U.S. laws and regulations. With proper documentation and justification you can "sandbag" profits for several years. This allows Microsoft to pull out significantly higher profits on a down quarter. As far as I know, no other major corporation uses both these techniques as much as Microsoft has for the last 25+ years.

Haven't you ever wondered why Microsoft has been able to meet or beat the Street's expectations for the vast majority of the last 30 years? Now you know -- and it's 100% legal and acceptable to the financial community.




RE: Microsoft's been doing it for years
By Pirks on 4/19/2013 2:56:07 PM , Rating: 3
That's a nice trolling man, but here's another, quite more juicy bit. Tony should be interested.

Hey Tony, check out this one: entertainment and devices division (you know, the people that make and sell surface) posted 1 billion of gain in revenue and half a billion of gain in income, compared to previous quarter. Now dig this: if you divide 1 billion of extra revenue this quarter by a surface asp which is like 600 bucks you'll get EXACTLY the number of surfaces sold as estimated by analysts - 1.5 million.

How do you like that Apple boy?


RE: Microsoft's been doing it for years
By Tony Swash on 4/19/13, Rating: -1
By Pirks on 4/19/2013 4:29:46 PM , Rating: 2
Well, given that most of these sales are real horrible RT, this is not so bad. If they sold 1 million of normal Windows licenses I'd agree this is a failure, but 1 million of RT sales? This is WAY more than I expected, or anyone else expected (except you of course, you never used RT so you have no idea what I'm talking about)


RE: Microsoft's been doing it for years
By inighthawki on 4/19/2013 4:37:08 PM , Rating: 2
An accurate statement is that it is significantly less than competition, but saying it is a "pathetic failure" is a gross misuse of those words. 1.5 million devices shipped is a lot regardless of what the product was.


RE: Microsoft's been doing it for years
By Pirks on 4/19/13, Rating: 0
RE: Microsoft's been doing it for years
By inighthawki on 4/19/2013 5:45:43 PM , Rating: 3
Why do you think Windows RT is shit? Is it just because it can't run x86 windows apps? If that's the case it's a pretty poor argument to say that the OS itself is bad, just that Microsoft did a poor job differentiating it from their other versions. I've thoroughly enjoyed my surface RT, I just have to realize what I can do with it and not expect it to do something it can't.


RE: Microsoft's been doing it for years
By Pirks on 4/19/13, Rating: 0
By Mint on 4/20/2013 1:08:18 PM , Rating: 2
I'm convinced that RT is just a backup plan to make sure Intel didn't sandbag its next Atom effort.

Intel couldn't have been happy with how netbooks displaced a lot of entry level laptop sales with CPUs that give Intel far more profit per unit, and this is despite them gimping Atom and its chipset quite a bit in the early days. They made Atom just barely good enough so that along with the Intel brand, they stopped AMD or Via from claiming that market.

Clovertrail has had some supply problems, and tablets based on it should be as cheap a ARM tablets, but they aren't. MS decided to send a message.


By crispbp04 on 4/23/2013 2:44:38 PM , Rating: 3
I own a Pro and RT Surface. When I'm not needing to use beefy x86 apps I prefer using the RT. I feel that RT does have a future in the mainstream market. The inclusion of Office is a nice perk, and it could be a real winner with a next generation CPU and Wacom digitizer like the pro. I think it's very impressive how well my RT runs even with a gimp (by today's standards) Tegra 3.


By Shadowself on 4/19/2013 5:42:31 PM , Rating: 1
It would depend upon the exact meaning of "1.5 million devices shipped".
If that is 1.5 million sold to end users, that's a lot.
If that is 1.5 million retained by end users after accounting for any and all returns during that period then that truly a lot.
If that is 1.5 million shipped to Microsoft's distributors (with an unknown number, but lesser number, sold to end users) then it's disappointing as some companies are known to channel stuff (NOT saying that's what Microsoft did).
Without an accurate definition of "1.5 million devices shipped" it is impossible to say whether this was a significant number or not.


RE: Microsoft's been doing it for years
By Shadowself on 4/19/2013 5:34:44 PM , Rating: 2
What trolling?

I was just stating that people should not be surprised if Microsoft beat expectations on profit even thought overall income was not that great.

I just was stating a well known technique that Microsoft has been using for many years to bolster its reported profits. There's nothing wrong with Microsoft doing it. Many large companies do it to some extent. Microsoft just does it more than most. There was a controversy in the late 90s over Microsoft using this technique to continuously beat the Street's projections, but the furor over their use of this technique died down after a couple of months. Then everyone went back to not caring about it at all. (The supposed objection of a few was that Microsoft deferred profits and used contingent liability accounts to hold back profits and rolled out "just enough" profit each quarter in order to beat the Streets expectations, thus allowing Microsoft to "exceed expectations" quarter after quarter even during a down quarter. It turned out that most analysts and institutional investors in the long run did not care. Thus the whole controversy blew over.)

How is any of this trolling? I did not bash Microsoft (or any other company) for using GAAP approved methods for showing a good profit this past quarter. I did not say Microsoft did anything underhanded. I explicitly stated that what Microsoft does is 100% within the rules.

Again, how is this trolling?

And why would Tony be interested at all in my post?


RE: Microsoft's been doing it for years
By Pirks on 4/19/2013 5:47:32 PM , Rating: 1
Tony would be interested in my post, not yours. And if it's not trolling then excuse me please, but it definitely sounded a bit like trolling to me.


By Tony Swash on 4/22/2013 2:09:57 AM , Rating: 1
quote:
Tony would be interested in my post, not yours. And if it's not trolling then excuse me please, but it definitely sounded a bit like trolling to me.


Sadly you have become afflicted by the all too tiresomely widespread practice of using the word 'troll' or 'trolling' as short hand for 'you have posted something I disagree with or dislike but I cannot be bothered to, or are incapable of, properly responding so I will just use an insulting shorthand word to dismiss your comment'.


RE: Microsoft's been doing it for years
By Shadowself on 4/19/2013 5:45:26 PM , Rating: 2
Oh, and a few days ago I was called a Samsung fanboi on this site.

Now you are calling me "Apple boy"?

I would have thought that these two titles would be mutually exclusive.

I guess not on DailyTech's threads!


RE: Microsoft's been doing it for years
By Pirks on 4/19/2013 6:05:53 PM , Rating: 2
Apple boy was said to Tony, not to you. Chill man :)


RE: Microsoft's been doing it for years
By Tony Swash on 4/19/13, Rating: 0
RE: Microsoft's been doing it for years
By StormyKnight on 4/20/2013 1:47:29 AM , Rating: 2
Of course you do. It is a balm to your soul to make up for each time you swing your legs over the bed when you get up in the afternoon hearing your knees and hip joints creak and grind in protest.


RE: Microsoft's been doing it for years
By Tony Swash on 4/20/13, Rating: -1
By inighthawki on 4/20/2013 4:43:58 PM , Rating: 2
Probably the disappointment in realizing there are people on the planet that are such unimaginable hardcore fanboys like you that are so incredibly closed minded.


By StormyKnight on 4/23/2013 12:16:32 AM , Rating: 1
I'm not bitter. I just enjoyed calling you 'old' in a slightly long winded way. I mean, you WERE in your 30's when the Apple I was introduced, were you not??


By Just Tom on 4/23/2013 5:20:52 PM , Rating: 2
quote:
Haven't you ever wondered why Microsoft has been able to meet or beat the Street's expectations for the vast majority of the last 30 years? Now you know -- and it's 100% legal and acceptable to the financial community.


If you 'float' a profit from one quarter to another that would mean you did not meet expectations in the month you floated profits from. This technique does not create profits, it just moves it from one quarter to another. It is highly doubtful this is the reason MS exceeds earning expectations. If profits are deferred in one quarter, and used in a future one, that would mean MS would not meet earning expectations in the quarter profits are deferred from.


Good for AMD
By Ammohunt on 4/19/2013 12:43:36 PM , Rating: 2
Glad they can stay afloat. i recently converted from being a long time intel fan to AMD on my gaming rig since i saw no benefit in paying a premium for an intel processor vs AMD's offering since even the slowest AMD cpu's are more that enough to drive current games with a decent GPU(converting from Nvidia to AMD as well to benefit from unified drivers). lets hope they can diversify their business more as i see it consoles are an eventual dead end for gaming.




RE: Good for AMD
By txDrum on 4/19/2013 2:14:13 PM , Rating: 2
Eh. AMD really no longer represents the value prospect for gaming. The FX-8350 performs similarly to the half-as-expensive i3-3220(3320 now? or something). Some games are better, some are worse. Sure, you can overclock the hell out of a 4300 and get arguably better performance, but you're sacrificing heat, noise, and power.

The slowest AMD Cpu's are mostly more than enough to drive current games. Things like Starcraft II would cry at an AMD cpu though. The single core performance just isn't there. Here: http://www.anandtech.com/show/6396/the-vishera-rev...

They don't do terribly, and sure the frames are high enough, but the FX-4300 doesn't do well enough to justify its equivalent price to an i3-3220 (which is now performing slightly better cause they ship with higher clocks now). That, plus more expensive motherboards and fewer features on said motherboards, plus power, means that you aren't gaining much value.

Piledriver DOES have some real, tangible applications that it excels in. Gaming just isn't one of them. I do hope that somebody gives Intel competition some day though, even if it is just in value. Trinity is already a very good budget platform, if it was just a little bit better generation over generation versus intel, it could be fantastic for the low end market.


RE: Good for AMD
By Ammohunt on 4/19/2013 3:37:22 PM , Rating: 1
RE: Good for AMD
By txDrum on 4/19/2013 4:53:52 PM , Rating: 2
Oh god not this video. I saw that when it came out.

God forbid one random youtube video that goes against everything we've ever seen including websites like Anandtech prove AMD right. Vague, video tests? Better testing methodology please. Airflow, case, etc. It was by no means a terrible test but there are so many flaws and discrepancies in his testing alone, let alone when comparing it to everybody elses.

First flag: Benchmarking crysis (metro? don't remember) with a 7870 on 1080P. That's a GPU bound scenario, folks.

See this post on that video if you want to see why he's an idiot: http://www.teamliquid.net/forum/viewmessage.php?to...

Basic quote from that link: "3770 > 8350 at 1080p, yet 3770 < 8350 at 1440p. Uh, changing resolutions changes the workload on the GPU, not the CPU.
3770 > 3570 by huge margin without streaming, despite only 100 MHz / 2MB L3 / HT difference (and HT being irrelevant here). We all know 100 MHz won't make that kind of change, for processors running 3+ GHz, and if 2MB extra L3 and/or HT were somehow so important—they're not—then one would expect the 3820 to do a lot better despite being SB-E instead of IVB."

That reviewer did something wrong. You don't get different FPS in cpu bound scenarios by changing the resolution. The very definition of changing the resolution puts more/less load on the GPU, not the CPU.


RE: Good for AMD
By tecknurd on 4/23/2013 7:09:34 PM , Rating: 2
I agree. Benchmarking a CPU with gaming does not make sense to me. Gaming is more for benchmarking GPU. To benchmark a CPU, include file compression, 3D rendering using ray tracers, video encoding just to name a few.

The only times when a CPU is bounded in games is when the game have to provide AI to many bots in the game. Other times is when the game requires more vertex shaders than the video card supports.


RE: Good for AMD
By stickmansam on 4/20/2013 1:35:53 AM , Rating: 2
Here are some benchies of recent games though that show AMD doing pretty good.

The FX6300 pretty much matches the i3 3220 in perf but can OC if you want to and in newer games, it will seriously beat the i3

The FX6300 is at $130 while the i3 3220 hovers at about $120
The i3 3240 is about $130+

http://www.xbitlabs.com/articles/cpu/display/fx-83...

http://www.techspot.com/review/615-far-cry-3-perfo...

http://www.techspot.com/review/642-crysis-3-perfor...


RE: Good for AMD
By txDrum on 4/20/2013 3:02:25 AM , Rating: 1
Well its 140$ although it is on sale.

With the fact that decent AMD motherboards cost more (iirc) and the insane power draw by an FX 6300 coming into play though, you're almost always better off spending the extra ~80$ upfront, making at least half of it back over 2 years (or less, depending on how much you use your comp and how much electricity costs in your area) and reaping nearly 2x performance benefits in some places.

Ivy bridge is overclocking to 5Ghz on 1.2-1.3V with Intels latest samples. On air. If haswell is even remotely as good, even without the slight IPC gain, it's going to continue to stomp AMD into the water. When an extra 50% money gains you 100+% performance, AMD is in trouble. Especially because Haswell will further expand on that power gap.


RE: Good for AMD
By Cheesew1z69 on 4/20/2013 7:28:18 AM , Rating: 2
quote:
With the fact that decent AMD motherboards cost more
No...


RE: Good for AMD
By StormyKnight on 4/20/2013 1:56:43 AM , Rating: 2
I whole-heartedly disagree. I've been an AMD fanboy for years. I waited patiently for Bulldozer to hit since it was promised they would have i5 performance at basically celeron pricing. But when that silicon hit the streets, boy was that ever a total failure. The only Intel chips that it came close to were the i3s and even they bested Bulldozer in several benchmarks. I jumped ship right then and built my first Intel-based rig. An i5-2500K system with a safe overclock from 3.3GHz to 4.46GHz just using fans. You just can't beat that.


Wow - stall the ball a sec.
By Amiga500 on 4/19/2013 2:02:32 PM , Rating: 2
Plotting a switch to ARM?

As far as I was aware, they were definitely sticking with x86, but also designing/building bolt-ons to ARM based architectures.

This is the first I've heard of a complete switch... Is that the case, or am I mis-reading?




By thesavvymage on 4/19/2013 2:10:22 PM , Rating: 3
youre not misreading, dailytech is just mis-reporting. If you even go back to the article they linked to the switch, its clear that its just an addition, not a real switch.


So who thinks....
By FITCamaro on 4/19/2013 11:58:51 PM , Rating: 3
Pirks and Tony Swash are the same person and is arguing with himself.




So who thinks....
By Pirks on 4/20/2013 12:59:46 AM , Rating: 3
FITCamaro and FATCamaro are the same person and is arguing with himself.




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