AMD’s release is out: Revenue comes in a hair above consensus at $1.51 billion and EPS from continuing operations came in at the 51 cent loss analyst had expected. AMD gave back a few points on GM, which increased sequentially from 56% last quarter to 58% in Q1. R&D and MG&A costs also spiked, increasing from 27% and 18% of revenue last quarter to 33% and 23% respectively in Q1. AMD also said it was facing a ” challenging economic environment for consumers and lower than expected revenues of previous generation products, resulting in lower than expected revenues in all business segments.”
We’ll be covering the conference call with live analysis at 5:00 PM EDT.
SAI Spreadsheet: AMD Financial Analysis
CONFERENCE CALL NOTES
5:00: Call begins. Usual introductory remarks and disclaimer
5:07: Q1 was: “difficult start. Seasonally weak quarter, experienced lower than expected revenues across all sectors.”
5:09: Lower microprocessor unit shipments resulted in lower gross margin. operating expenses up 6%, in line with guidance.
5:11: Microprocessor ASPs flat. Due to strength of new product mix, operating margins improved, despite drop in sales.
5:13: Outlook: revenue to decrease on seasonality. Operating expenses to remain flat. $50 million aquisition charge. Will take restructuring charge.
5:15: “Our business environment has changed… embarking on significant restructuring.” “We need to intensley scrutinize non-core businesses.”
5:18: Q&A begins…
5:20: Merrill analyst asks where Opex will be after restructuring… Answer: 25 to 50 million saved per quarter.
5:22: JMP Securities analyst asks how customers are reacting to Barcelona… Answer: “enthusiastic” from both customers and end-users. “The products is terrific.”
5:25: Global Capital analyst asks about Puma Platform… will it turn notebooks around? Answer: “Platform has achieved great success in terms of design wins.” Will hit market in Q2, provide opportunity in back half of the year.
5:30: Lehman analyst asks for metrics on Barcelona… Answer: Barcelona server shipments in Q1 were 25% of mix… ought to grow to 50% in current quarter and beyond.
5:33: Credit Suisse analyst asks about why Q2 guidance better than seasonality would suggest… Answer: Industry down 9% seasonally… our new product lineup will help.
5:37: Citi analyst asks about departure of CTO… Answer: Will not affect roadmap to breakeven.
5:41: Citi analyst aske whether there were any geographic changes over course of quarter… and whether Europe was getting weaker… Answer: No question there are signs of weakness in Western Europe, largely offset by Eastern Europe.
5:46: Deutsche Bank analyst asks whether there was a difference between ASPs in notebooks and desktops… Answer: It’s a mix issue.
5:50: UBS analyst asks about Graphics lineup, given current lineup, can AMD regain share? Answer: Yes, beginning in Q2 and beyond.
5:55: Analyst asks about end-market segments where Barcelona will have most success… Answer: Opportunity to gain share in two-piece space across many segments, including web servers. Client side: Historic strength in consumer retail.
5:58: AmTech analyst asks about 45nm, does AMD have a measure of how well 45nm will do in terms of performance? Answer: We’ve put more function on the di. improvement in transistor and Power efficiency.
6:00: Call ends…
Advanced Micro Devices (AMD) reports after close today with a conference call scheduled for 5:00 PM EST. The street is bearish, especially after Intel’s (INTC) quarter suggested that AMD hemorrhaged share. Shares are down 21% since its last quarter, in which management reported unexpected margin expansion. Optimism didn’t last, however, as the firm was plagued by delays and glitches.
A slowly deteriorating macroeconomic environment is also expected to take its toll, with Intel reporting flat ASPs and continued price deflation in NAND. Shipments of AMD’s Barcelona chip will also be of interest. The 100,000 units shipped in December missed expectations. AMD has already adjusted its revenue guidance down to $1.50 billion from $1.61 billion and has pledged to trim its workforce by 10% (1600 workers) by the end of Q3.
- Revenue: ~ $1.50 billion (Guided down from previous estimates of $1.61 billion)
- Gross Margin: ~ 59%
- EPS: -$0.51
- Outlook: 2008: $6.403 billion / -$1.24 2009: $7.665 / $0.28
- 2008: $6.403 billion / -$1.24
- 2009: $7.665 / $0.28
Our AMD Financial Analysis Spreadsheet is here.
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