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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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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.

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