AMD Below Financial Target for 2014 as Intel Surpasses Expectations

It’s no secret that AMD (NASDAQ: AMD) has been struggling financially in recent years. For quite some time, AMD has posted net losses, and 3Q14 looked to be a turning point for AMD. It seems that the expectations have fallen short, given AMD’s freshly-posted financial results for the fourth quarter (and entire ear) of 2014, none of which are encouraging for the financial future of the company.

In the fourth quarter, AMD had further reductions in revenue and posted net losses. This is in contrast to Intel, who actually beat Wall Street’s fourth quarter earnings targets with a revenue of  $14.7 billion.

The yearly data doesn’t paint much prettier of a picture for AMD, either:

As we can see, while AMD is still much better off now than two years ago, the company is still having trouble financially. To add to this, AMD currently has approximately $2.21 billion in debt hanging over its head.

Despite aggressive GPU pricing, computing and graphics revenue decreased 16% from 2013. Two major reasons for this are likely the release of the 900 series from nVidia (GTX 980 & GTX 970), and the further aging of FX CPUs and their chipsets, favoring more Intel sales. On the other hand, enterprise, embedded, and semi-custom segment increased revenue 51% compared to 2013. This market segment is primarily driven by increased sales of semi-custom SoCs, like those in the Xbox One and PS4. With Sony preparing to release the Playstation 4 in China, we expect SoC sales to continue to improve for now. AMD can’t survive on this forever, though.

AMD further expects revenue to shrink approximately 15% this quarter, which will certainly not help AMD’s already-tight budget. Despite all this, AMD CEO Lisa Su is optimistic about the company’s future, saying that “we continue to address channel headwinds in the Computing and Graphics segment and are taking steps to return it to a healthy trajectory beginning in the second quarter of 2015.”

- Michael "The Bear" Kerns.