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Semiconductor industry

AMD Reports Solid Q3 Outlook, Beats Consensus Estimate by a Penny

Strategic Insights

— 2 min read

Advanced Micro Devices (AMD) reported its first-quarter earnings of 9 cents per share, surpassing the Zacks Consensus Estimate by a penny. The company's revenues in the last quarter came in at $1.57 billion, down 2.4% and 4.8% from the previous and year-ago quarters, respectively. This was better than normal seasonality, although it may be considered to be somewhat worse than AMD's expectations of flat to slightly down revenues for the quarter and just short of the consensus estimate of $1.58 billion. AMD's revenues in the quarter benefited from the ramp up of both the Brazos and Llano chips, which are expected to accelerate in the second half of the year.

AMD's Computing Solutions segment generated 77% of its sales in the last quarter, flat sequentially as well as in comparison with the year-ago quarter. The segment benefited from higher ASPs of its new chips, although units were seasonally down. AMD's graphics business generated the remaining 23% of its sales, down 11.1% sequentially and 16.6% from a year ago.

Key Takeaways:

  • AMD reported first-quarter earnings of 9 cents per share, beating the Zacks Consensus Estimate by a penny.
  • Revenues in the last quarter came in at $1.57 billion, down 2.4% and 4.8% from the previous and year-ago quarters, respectively.
  • AMD's Computing Solutions segment generated 77% of its sales in the last quarter, flat sequentially as well as in comparison with the year-ago quarter.
  • The segment benefited from higher ASPs of its new chips, although units were seasonally down.
  • AMD's graphics business generated the remaining 23% of its sales, down 11.1% sequentially and 16.6% from a year ago.
  • AMD reported a pro forma gross margin of 45.7%, up 111 basis points (bps) from the previous quarter and up 110 bps from the year-ago period.
  • The company has done a good job reshaping its balance sheet over the past year, with working capital metrics remaining strong in the last quarter.
  • AMD generated $174 million of cash in operations and spent $67 million on capex in the quarter.
  • The company has around $2.2 billion in long-term debt, $4 million in short-term debt, and $76 million in long-term liabilities, yielding a net debt balance of $414 million at quarter-end.

Statistics:

  • AMD's revenue in the last quarter: $1.57 billion
  • Computing Solutions segment: 77% of sales
  • Graphics business: 23% of sales
  • Pro forma gross margin: 45.7%
  • Gross margin increase from previous quarter: 111 basis points
  • Gross margin increase from year-ago quarter: 110 basis points
  • Cash generated from operations: $174 million
  • Capex spent: $67 million
  • Long-term debt: $2.2 billion
  • Short-term debt: $4 million
  • Long-term liabilities: $76 million
  • Net debt balance: $414 million

Sources:

  • PRNewswire, "Zacks.com Announces the List of Stocks Featured in the Analyst Blog" (July 25, 2011)
  • Zacks Equity Research, "AMD Reports Solid Q3 Outlook, Beats Consensus Estimate by a Penny" (July 2011)
  • Zacks Investment Research, "About Zacks Equity Research" (n.d.)
  • Zacks Investment Research, "About Zacks" (n.d.)

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