Advanced Micro Devices took a step back financially in 2012 but executives said Tuesday that the company’s investments in areas like low-power chips for tablets and the data center would straighten the ship in the coming years.
AMD’s fourth-quarter and full-year numbers were down across the board, with fourth-quarter sales of $1.16 billion down 31 percent from the fourth quarter of 2011, and overall revenue of $5.42 billion for 2012 down nearly 18 percent from the previous year.
The net income picture was equally distressing for a company which fought its way back to profitability a few years ago following a long string of quarters in the red, only to find itself on the wrong side of the profit-loss column once again. AMD lost $473 million in its fourth quarter and lost $1.18 billion for the year after reporting positive net income of $491 million in 2011.
The chip maker’s larger rival Intel reported similarly flagging numbers in its own year-end earnings report last week, but AMD’s year-over-year declines were steeper in most categories, its margins thinner, and the hit to investorsa loss of $1.60 per share in 2012more dear.
“AMD continues to evolve our operating model and diversify our product portfolio with the changing PC environment,” AMD president and CEO Rory Read said in a statement. “Innovation is the core of our long-term growth. The investments we are making in technology today are focused on leveraging our distinctive IP to drive growth in ultra low-power client devices, semi-custom SoCs and dense servers.
“We expect to deliver differentiated and groundbreaking APUs to our customers in 2013 and remain focused on transforming our operating model to the business realities of today.”
In a conference call with analysts, Read added that AMD believes that a “tsunami of new devices” in both the mobile and embedded markets will help the company turn things around as it develops fanless, quad-core Systems-on-a-Chip (SoCs) for client and embedded systems which increasingly require strong graphics processing components.
He said that AMD should also benefit from the growth of cloud-driven computing with its high-density server products and data center fabric technologies.
But the chip maker indicated that it will get rougher before it gets better. AMD’s stripped-down guidance for the first quarter of 2013 had revenue coming it at 9 percent lower than in the fourth quarter of 2012.
“2012 was a difficult year for AMD primarily driven by the PC market slowdown and challenges driving server market share,” said Patrick Moorhead, principal analyst for Moor Insights & Strategy and a former AMD executive.
Moorhead highlighted some “big investments” that AMD is betting will “pay off big in the future,” including forthcoming products code named Temash, Richland, and Kabini.
“AMD is banking on [last year’s] SeaMicro acquisition for dense servers, as well as Temash, a differentiated quad-core x86 SoC for tablets, and 64-bit ARM servers for 2014. PCs will still be the majority of revenue for 2013, so flawless execution on [future-generation APUs] Richland and Kabini will be very important,” he said.
Last October, AMD began major layoffs in the final quarter of 2012, resulting in a $90 million restructuring charge in the quarter. The company said it planned to let 15 percent of its global workforce go.
By Damon Poeter, PCMag