SAN FRANCISCO – Advanced Micro Devices reported large operating losses in its latest quarterly financial update, but AMD officials remained hopeful about the company’s trajectory for 2015.
AMD reported fourth quarter 2014 revenue at $1.24 billion with an operating loss of $330 million and net loss $0.47 per share. Year-over-year revenue grew for the first time since 2011, rising 4% to $5.51 billion, while operating losses in 2014 totaled $155 million. The company saw double digit declines in several segments, but CEO Lisa Su expects income to stabilize in 2015.
“We have right-sized our investments and taken actions to reduce downstream inventory in the fourth quarter,” Su said. “I am optimistic about our long term opportunities but realistic about the short term challenges.”
AMD faces the challenge of improving its computing and graphics business, which decreased 15% from the third quarter and 16% from 2013. AMD officials attributed the decrease to lower desktop processor, chipset, and GPU sales, which resulted in a $56 million operating loss in 2014. Interim CFO Devinder Kumar said the year-over-year losses were due to “lower channel sales partially offset by lower operating expenses.”
“I do believe we will save [the computing and graphics] business. Strong product launches are key to our second half of 2015 performance,” Su said, adding that battery life and performance in AMD’s 28nm products will drive success.
AMD’s enterprise, embedded, and semi-custom segment showed an annual increase but quarterly loss following major shipments to the likes of Sony and Microsoft for Christmas-time game console purchases. Operating income in Q4 was $109 million following an 11% drop in sales of semi-custom SoCs; annual revenue increased 51%. Embedded processor units increased for the third quarter in a row.
Su told investors and analysts that she expects AMD’s embedded business to grow in 2015, partially aided by the introduction of its next-generation x86 processor, Carizzo. The CEO, who marked her 100 days in office during the financial call, said she also expects semi-custom units to increase in the third year of gaming console ramp-up.
Kumar said AMD’s lack of success in the server market is “no secret,” though the company hopes to add value to a server ecosystem that will remain x86-based for some time. In a release, AMD highlighted its progress in
developing the ecosystem for both 64-bit ARM-based servers and x86-based servers.
As AMD gets out of what one analyst called “perennial restructuring mode,” Kumar said he expects revenue to decrease by 15% in the first quarter of 2015. AMD is “actively designing a number of products” with 14nm technology, she said.