This summary is based on the first quarter fiscal 2007 earnings call conducted by Advanced Micro Devices, Inc. (AMD: chart) on April 19, 2007.
Management:
President, Chief Operating Officer: Dirk R. Meyer
Director, Investor Relations: Mike Haase
Chief Financial Officer, Executive Vice President: Robert J. Rivet
Chairman of the Board, Chief Executive Officer: Hector J. Ruiz
Executive Vice President, Chief Sales and Marketing Officer: Henri P. Richard
Key Investors Issues
- EPS were a loss of $1.11 per share compared to a profit of 38 cents per share last year.
- Net income was a net loss of $611 million, down from a profit of $184.5 million in the year-ago period.
- Sales sank to $1.23 billion from $1.33 billion a year ago.
First Quarter Highlights
Revenue was $1.233 billion, down 30% sequentially and down 7% compared to the first quarter of 2006.
The company recorded a large net loss at $1.11 per share.
Three noteworthy items to highlight in these results include:
- ATI acquisition related and integration charges of $113 million, or 21 cents per share;
- Employee stock-based compensation expense of $28 million, or 5 cents per share;
- A tax expense of $23 million, or 4 cents per share, primarily due to the need for a deferred tax liability related to the large tax deductions AMD receives for the amortization of good will from the purchase of ATI.
Operating loss was $363 million, excluding ARC charges and stock-based compensation expense.
- EBITDA was a negative $196 million.
- Gross margin was 31%, excluding ARC charges and stock-based compensation expense, compared to 40% in the fourth quarter of 2006. The decrease from the prior quarter is attributable to lower microprocessor unit sales, lower microprocessor ASPs, and the inclusion of the former ATI operations, which generally have lower margins for the entire quarter.
Computing solutions revenue, which includes the former computation products, embedded products and the former ATI chipset business, was $918 million, down 38% from the prior quarter, primarily due to lower desktop, mobile and server unit sales and revenues.
- Microprocessor unit shipments declined in all product categories and ASPs declined in both desktop and mobile.
- Chipset sales increased 15% sequentially, reflecting a full quarter of operations.
- The computing solutions segment had an operating loss of $321 million.
- Graphics segment revenue was $197 million, a sequential increase of 19%, reflecting a full quarter of operations. Operating loss in the graphic segment was $35 million.
- In the consumer electronics segment, revenue was $118 million, down from the previous quarter and also reflects a full quarter of operations. Handheld and gaming revenue declines were offset by sequential growth in the DTV category.
- The operating loss in the consumer electronics segment was $4 million.
The cash balance was $1.2 billion, approximately $600 million above minimal acceptable levels.
- The company continues to be focused on increasing liquidity for the business and expanding financial flexibility.
- Plan continues to include: selling 200 millimeter fab equipment; two, monetizing investment expansion, collecting grants and subsidies from investments in Dresden, and selling administrative land and offices.
- The company continues to evaluate a wide range of financing opportunities that are available.
Total inventory was $937 million, up $123 million from the fourth quarter, driven by sales miss in the microprocessor business.
