AMD Reports Q1 Loss, Looks To Ultrathins For Growth


AMD reported Thursday better-than-expected but still bleak first-quarter earnings results, as it continues to face tough competition from rival Intel in the microprocessor market.

The Sunnyvale, Calif.-based chip maker reported a net loss of $590 million and revenue of $1.59 billion, which is down 2 percent year-over-year. AMD attributed the loss to one-time charges related to its March acquisition of microserver vendor SeaMicro for $334 million, along with the waiving of its exclusivity agreement with foundry spin-off GlobalFoundries. AMD said the waiver, which dissolved an agreement through which GlobalFoundries would be the exclusive manufacturer of its 28-nm processors, resulted in a one-time charge of $703 million.

The chip maker also said the loss could be attributed to sluggish sales in its Computing Solutions segment, which pulled in revenue of $1.2 billion, down 8 percent sequentially.

[Related: AMD-SeaMicro Deal: Analyst's Good News, Bad News Scenario]

Despite the loss, AMD CEO Rory Read highlighted key areas of growth for the company during the first quarter. He said the company’s server business, for instance, continues to make "steady progress," and it achieved its third consecutive quarter of server processor unit shipment growth. The specific unit number, however, was not disclosed.

Increased adoption of its Bulldozer architecture-based server chips, such as the low-power Opteron series announced in November, was a driving force behind the growth in its server business.

"For the first time, Bulldozer processors accounted for more than 50 percent of server revenue and unit shipments in the quarter," Read said during a conference call Thursday announcing the results.

AMD’s Graphic segments also saw "solid" demand in the first quarter, Read continued, particularly because of its next-generation AMD Radeon HD 7000 graphics chips. The segment’s revenue of $382 million was flat compared to last quarter, but Read said he will turn to AMD channel partners to grow this number moving forward.

"We are focused on growing the profitability of our graphics business by attacking and winning more channel business," he said in the call.

Read emphasized AMD’s upcoming Trinity APUs, which will power a new line of Ultrathin notebook PCs, as a future source of growth. The company’s Ultrathin line will face off directly against Intel’s Ultrabooks, which launched last year. But, according to Read, AMD will distinguish its Ultrathin line and get a leg up on the competition by offering the notebooks at more "mainstream" prices.

"Ultrathins are not just for the few and the premium, high-priced segment. We need to look at the ability to bring Ultrathins and high mobility to all customers, to bring it into mainstream," Read said. "And what’s exciting about the design wins that we’re seeing and the continued momentum around Ultrathins, and around AMD, is around our ability to reach mainstream price points, to open this up to everyone."

AMD is ramping production today of its Trinity APUs, and its OEM partners are preparing to launch a record number of Ultrathin designs running the new chips this quarter, Read continued. Ultrathins are slated to be broadly available in early fall.

AMD said it projects a 3 percent revenue increase for the second quarter.