AMD just released its financial results for the third quarter of 2012. Throughout the quarter the company earned $1.27 billion in revenues, -10% compared to the last quarter and -25% compared to the same quarter of last year. This lead to a net loss of $157 million based on GAAP, their operating loss amounts to $131 million. This amounts to a loss per share of $0.21 and a gross margin of 31%."The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,"
said Rory Read, AMD president and CEO. "It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities."Last week the company issued a pre-announcement
that already foreshadowed these rather disappointing numbers. In their earnings release AMD confirmed our educated guess that the write-off was related to Llano-inventory. Additionally AMD had to cope with lower ASPs in their processor business, offset by a bit higher ASPs in their GPU business. Segment revenues were down 11% for CPUs/APUs and 14% for GPU. The GPU business was adversely affected by lower OEM shipments, partially offset by strong channel sales which also explain the high ASPs.When AMD hit bad strides in 2006-2007, the company sold its former parking lot. Today, it's a location for several dozen homes.
As part of the earnings release AMD also announced a restructuring plan, which will be mostly implemented over the course of the fourth quarter. The plan includes workforce reductions by about 15% as well as site consolidation, as previously reported
. We’re uncertain at what does "site consolidation"
means, as the company already sold half of its Sunnyvale HQ, which is now a home to "Fusion Homes."
Most of the layoffs will already happen in the fourth quarter of 2012. For 2013 they have a business model in place, that targets break even with regards to operating income at a revenue level of $1.3 billion per quarter. This plan should be in effect by the end of Q3 2013."Our restructuring efforts are decisive actions that position AMD to compete more effectively and improve our financial results,"
said Mr. Read. "Reducing our workforce is a difficult, but necessary, step to take advantage of the eventual market recovery and capitalize on growth opportunities for our products outside of the traditional PC market."
For the fourth quarter of 2012 AMD expects another 9% sequential decrease in revenues, plus or minus 4%. They didn't give guidance for operating or net income, but even in the face of restructuring, at this point we'd expect a loss similar to Q3.
As always we are participating in the call and working on an analysis that will be posted in the next few days.
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