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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 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
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'.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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