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Othyn

AMD Earnings: Second-Gen RDNA in 2020, Quarterly Revenue up 50% and 50% debt reduction in 2019

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Posted (edited) · Original PosterOP

Original article:

 

https://www.tomshardware.com/news/amd-announces-4q19-earnings-second-gen-rdna-in-2020-quarterly-revenue-up-50-percent

 

Quote

AMD announced its fourth quarter 2019 and full-year earnings results today, with top-line numbers including record quarterly revenue of $2.13 billion, a 50% gain over the prior quarter. AMD also notched a record $6.73 billion in revenue in 2019, a 4% increase over the prior year. 

This is excellent news! And will hopefully spur continued innovation.

 

Quote

AMD also reduced its debt by 50% during 2019 and has $1.5 billion in net cash on hand, the highest since 2016. That's a massive change from its $4.5 billion in debt ten years ago. 

 

This is also amazing news, hopefully they will have more cash on hand now to address their GPU division...

 

Quote

AMD also made solid progress on the margin front as it enhances its profitability. Gross margins increased from 38% in 2018 to 43% in 2019, including a record 45% margin for the fourth quarter. AMD generated $170 million in profits during the quarter, a sharp increase over $45 million a year ago, and a total of $341 million during 2019. 

...

For 2020, AMD projects a 45% gross margin and a 30% increase in revenue. AMD said that, removing its semi-custom products from the mix, its other businesses grew over 20% during 2019 (including EPYC), and the company expects the same trend for 2020.

I mean this stuff speaks for itself, well done AMD.

 

This is a win for everyone, as hopefully this puts ever more clout behind their Ryzen and Epyc division to keep the competition fueled.

Edited by Othyn
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01100011 01101111 01101111 01101011 01101001 01100101 - Baked at 180°C for 10 minutes. Delicious!

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24 minutes ago, Tedny said:

Just don't build factory, like last time 

And don't buy a company billions in debt like ATI. 


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Good. Now please make NUCs and push harder into the mobile space.


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51 minutes ago, Brooksie359 said:

In fairness their GPU division helped keep them afloat while their CPU division was struggling because of their design decisions for the FX series. 

And now CPU division is keeping them up, although GPU division isn't really struggling. Sure they don't have top end cards, but they still move quite some low and mid end. Polaris series were widely popular and new Navi series are also very competitive cards.

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It’s funny how places spin this earnings as good news when in reality it didn’t meet market expectations and future guidance is also below expectations. Just take a look at the price movement for today.

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They're doing very good, this year will be quite important too. Aside from new CPUs and APUs as well as mobile side, highly anticipated Big Navi is to come. There are also upcoming consoles, big year indeed. 


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45% margin?! That’s insane.  2% margin is common in many businesses


Life is like a bowl of chocolates: there are all these little crinkly paper cups everywhere.

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4 hours ago, Syfes said:

And don't buy a company billions in debt like ATI. 

And don't buy stuff just to sell their valuable IP to competitors (Qualcomm/Adreno).

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18 minutes ago, schwellmo92 said:

It’s funny how places spin this earnings as good news when in reality it didn’t meet market expectations and future guidance is also below expectations. Just take a look at the price movement for today.

Makes one wonder why expectations were higher?


Life is like a bowl of chocolates: there are all these little crinkly paper cups everywhere.

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3 minutes ago, Bombastinator said:

45% margin?! That’s insane.  2% margin is common in many businesses

Not in the semiconductor industry:
Samsung Electronics: ~46%  
NXP Semiconductor: ~52%

Qualcomm: ~64%

Mediatek: ~41%

Broadcom: ~55%

TSMC: ~45%

Intel: ~58%

SK Hynix: ~41%

Nvidia: ~59%

Texas Instruments: ~63%

 

 

 

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13 minutes ago, schwellmo92 said:

It’s funny how places spin this earnings as good news when in reality it didn’t meet market expectations and future guidance is also below expectations. Just take a look at the price movement for today.

People in the finance world seem to work on a different mindset than the rest of us. One part is that share prices are an indication of how well they think you will do in future, not what you have done in the past. Part of the job of AMD's CFO would be to try and manage those expectations from the market to avoid big swings in share price.

 

9 minutes ago, Bombastinator said:

45% margin?! That’s insane.  2% margin is common in many businesses

45% gross margin doesn't sound unreasonable. I work for a US HQ, global presence company making technology products. The company's target GM is also around 45%. It fluctuates around that. Note margin only refers to part of the finance equation, relating your revenue to cost of goods. This doesn't include other factors, like R&D which would have to be covered by that.

 

Unless you're thinking of profit margin, which does take into considerations all costs. That could be much lower. 

 

Just for fun, AMD's market cap is about 40x bigger than where I work.

 

 


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1 minute ago, gabrielcarvfer said:

Not in the semiconductor industry:
Samsung Electronics: ~46%  
NXP Semiconductor: ~52%

Qualcomm: ~64%

Mediatek: ~41%

Broadcom: ~55%

TSMC: ~45%

Intel: ~58%

SK Hynix: ~41%

Nvidia: ~59%

Texas Instruments: ~63%

 

 

 

Yeah.  It’s the old stuff That’s low margin.  Food, clothing, shelter.  :/


Life is like a bowl of chocolates: there are all these little crinkly paper cups everywhere.

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2 minutes ago, porina said:

People in the finance world seem to work on a different mindset than the rest of us. One part is that share prices are an indication of how well they think you will do in future, not what you have done in the past. Part of the job of AMD's CFO would be to try and manage those expectations from the market to avoid big swings in share price.

 

45% gross margin doesn't sound unreasonable. I work for a US HQ, global presence company making technology products. The company's target GM is also around 45%. It fluctuates around that. Note margin only refers to part of the finance equation, relating your revenue to cost of goods. This doesn't include other factors, like R&D which would have to be covered by that.

 

Unless you're thinking of profit margin, which does take into considerations all costs. That could be much lower. 

 

Just for fun, AMD's market cap is about 40x bigger than where I work.

 

 

Ah. “Gross margin”. Yeah, that’s different.  Year end profits I don’t think are gross margin though.


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29 minutes ago, schwellmo92 said:

It’s funny how places spin this earnings as good news when in reality it didn’t meet market expectations and future guidance is also below expectations. Just take a look at the price movement for today.

I think Wall Street sets their expectations way to high most of the time anyway

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30 minutes ago, rockking1379 said:

I think Wall Street sets their expectations way to high most of the time anyway

Yeah, the market price drop could even be because they DID pay off debt. Which means less easy turnaround from investors trying to pump/dump/swap their shares. Hhahahahaha.

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3 minutes ago, TechyBen said:

Yeah, the market price drop could even be because they DID pay off debt. Which means less easy turnaround from investors trying to pump/dump/swap their shares. Hhahahahaha.

I would rather see a company have no debt at all. I’m glad they paid down so much of it. Maybe by end of this year they can have it all gone. Greatly reduces chances of going bankrupt when you have fewer expenses. 

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23 minutes ago, rockking1379 said:

I would rather see a company have no debt at all.

So long as the debt is serviceable (preferably positive & growing net operating profits), it is quite good (and arguably a necessity) for a company that needs to grow / scale in any reasonable amount of time. The key sticking point is whether the shareholder value generated from growth can exceed the cost of capital within a reasonable time-frame.

 

In short, you need to spend money (inventory doesn't appear out of thin air for free, salaries don't pay themselves, etc.) to make money.

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13 minutes ago, Tristerin said:

MAKES MOST MONEY, FLUBS RX 5600 XT RELEASE BEYOND BELIEF.  Its almost like the enjoy the struggle.

RX 5600 XT isn't a bad card, if you're enthusiast who doesn't mind flashing the card and knows what you're getting into. It's a really poor launch from perspective of a casual user. The card itself, with new BIOS is actually pretty damn good.

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2 hours ago, schwellmo92 said:

It’s funny how places spin this earnings as good news when in reality it didn’t meet market expectations and future guidance is also below expectations. Just take a look at the price movement for today.

form what i have read, they have weak data center business forecast and did not meet the wall street expectations. And wall street is really looking for a strong data center guidance (which intel gives them and see their stock raises ). This is quiet weird for me to understand: AMD's high-core count CPUs are much cheaper than intel's but somehow the data centers are not adopting very fast. Maybe they need more time for the adoption?

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6 minutes ago, Devin92 said:

form what i have read, they have weak data center business forecast and did not meet the wall street expectations. And wall street is really looking for a strong data center guidance (which intel gives them and see their stock raises ). This is quiet weird for me to understand: AMD's high-core count CPUs are much cheaper than intel's but somehow the data centers are not adopting very fast. Maybe they need more time for the adoption?

Data centers are super slow for adoption of anything.  Many will see AMD as a good product to keep an eye on, but when adding 50 new CPUs to increase load handling, they'll simply stick with as close to what they have already for 1000's of other CPUs in order to keep support costs down and their same volume discount purchase plans in place and active while using the same models of everything else (for example, tons of places have only 2 or 3 SKUs from HP or Dell that have been validated as orderable to put into a rack).

 

If Intel products in the data center were horribly BROKEN rather than just more expensive for most types of performance, that would be different.  But, for the most part, they all work fine, so unless you're ramping up a NEW data center or completely separate project from anything else, those customers are still unlikely to jump on AMD just yet.  Once we see the next Zen architecture happen though, if intel doesn't have a proper answer and update by then, it'll probably start to be big enough to force wholesale moves, especially since more of the big named server product companies are now working with AMD, and it won't be first gen AMD products from them anymore either.

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11 minutes ago, justpoet said:

Data centers are super slow for adoption of anything.  Many will see AMD as a good product to keep an eye on, but when adding 50 new CPUs to increase load handling, they'll simply stick with as close to what they have already for 1000's of other CPUs in order to keep support costs down and their same volume discount purchase plans in place and active while using the same models of everything else (for example, tons of places have only 2 or 3 SKUs from HP or Dell that have been validated as orderable to put into a rack).

 

 

make sense. well then are those wall street guys just ignorant on this very simple logic?

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4 hours ago, Brooksie359 said:

In fairness their GPU division helped keep them afloat while their CPU division was struggling because of their design decisions for the FX series. 

They paid almost 2x what ATi was worth. They took multiple Goodwill impairments. ATi's profits didn't cover the debt payments AMD needed to take on. 

 

AMD paid 5.6Bn of which 3.2Bn was "Goodwill" - think reputation and "synergy". At a 10% marginal cost of capital, that means AMD would've needed 320M profit from graphics to cover the gap. Even with tax write-offs on $2Bn or so that only reduced the lost cash to around $2.6Bn. ATi's profit before the merger was $15M and there were a number of years where AMD+ATi combined had a lower market cap than ATi alone had in 2005. 

 

https://www.google.com/amp/s/www.cbc.ca/amp/1.641782

 

For the record I might have a few figures off but I'm directionally correct. I'm not a financial engineer or investment banker but I can at least keep up with one of they talked about their field. 

 

---------

 

For the money wasted, they could've weathered FX and accelerated Ryzen's development by a few years (by starting earlier and having multiple teams), though "Ryzen" might've looked more like K7 on steroids. 

 

 

 


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