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[anandtech] AMD warns on Q2 2015 earnings

14K views 322 replies 89 participants last post by  Wishmaker 
#1 ·
AMD Updates Second Quarter Outlook

http://phx.corporate-ir.net/phoenix.zhtml?c=74093&p=irol-newsArticle&ID=2064993

http://www.anandtech.com/show/9418/amd-confirms-20nm-products-moved-to-finfet-warns-on-q215-earnings

Well the bleeding is getting worse. AMD is going to have a torrid 12-15 months before they get FINFET products out. Right now Nvidia and Intel are hammering AMD from both sides. Its a pathetic state of affairs from years of falling behind the competition.

Anyway if Zen does not succeed AMD will be gone. We don't want that to happen in the interest of competition.
 
#2 ·
They're too far back and have virtually no chance to ever recover, there is no way out for them and we all know it.

So with that said... who's the actual front runner to buy AMD? Samsung? Qualcomm? MS? too many conflict of interest for MS I think. I wish IBM would re enter the consumer market. Whoever it is I'm sure we'll be in better hands than we've been in.

What bums me out the most about this is ATI and what has now happened to the GPU division. $5.4 billion turned into nothing by AMD.
sad-smiley-002.gif
I think I'll keep my 4850, 4870, and 5870 E6 with their beautiful ATI branding.
sad-smiley-002.gif
 
#3 ·
The key take-aways of the announcement are these:

  • 2Q15 revenue down 8% sequentially (previous guidance was 3% down)
  • 2Q15 non-GAAP gross margin 28% (previous guidance was 32%)
  • Weaker than expected OEM PC product demand for APUs
  • $33m charge for switching 20nm designs to "leading gen FinFET node"
Note that AMD stock was at $2.47 (down .06) at the close of trading today, but has plummeted in after-hours trading to $2.13 (down another 34 cents, or 14 percent) as of this post. It dropped so fast that a trading halt was placed on the stock for about 15 minutes!
 
#4 ·
Notice how we say Intel and Nvidia are hammering AMD. It's like two companies pitted against one. To be fair, if Nvidia or Intel had to do double the work, like AMD, I'm sure they won't be seated in the position that they are today. I'm no fan boy. I'm just pointing out a fact which many seem to overlook.
 
#5 ·
Quote:
Originally Posted by raghu78 View Post

AMD Updates Second Quarter Outlook

http://phx.corporate-ir.net/phoenix.zhtml?c=74093&p=irol-newsArticle&ID=2064993

http://www.anandtech.com/show/9418/amd-confirms-20nm-products-moved-to-finfet-warns-on-q215-earnings

Well the bleeding is getting worse. AMD is going to have a torrid 12-15 months before they get FINFET products out. Right now Nvidia and Intel are hammering AMD from both sides. Its a pathetic state of affairs from years of falling behind the competition.

Anyway if Zen does not succeed AMD will be gone. We don't want that to happen in the interest of competition.
It's obvious that AMD would be bought out as constantly brought up on these forums, so competition wouldn't simply vanish. The idea of no more AMD is a tough pill to swallow though but that's how it goes in the competitive world. We're nearing the end of silicon and advancements aren't as simple as smacking on more transistors and cranking up the clocks anymore. The "lower power" phase we're in right now is going to reach a brick wall soon enough as well.

Zen is looking to be good and I'll be grabbing a chip and Am4 board once available, the real question is can AMD sell it. A good product isn't going to save the company alone, there must be some kind of marketing campaign and push to get these chips in OEM machines. They are also in dire need of better pricing strategies, I don't see any reason why a die hard Nvidia user is going to jump over to fury for similar performance and no major discount. I also don't see a reason anybody running any Intel chip will make the jump when the performance per dollar is totally on Intel right now at every price point. 5 years ago the Phenom II lineup did so well because they were by far the best performance you could get in a chip for only $200 (or less), prior to that it was the same AND they were releasing flagship chips (tbird) to boot.

Surely they must realize the R9-290 is so popular because it is pound for pound the best performer by quite a margin for somebody looking to only spend around $270 on graphics? I know tons of people who just grabbed CFX setups of the tri-x 290 simply because of the performance per dollar. In this insane price $700-1100 GPU market, the Fury X would completely stamp out Nvidia's line up if AMD was just able to get it on the shelves at a lower price. Likewise, an 8 core Zen CPU doesn't have to beat a 4790k or better, it needs to be comparatively close and much cheaper. Fighting for the flagship isn't going to save a company when the money isn't in the premier performance market and never has been, they have to get into the average Joe's home and work PC again.

Just my opinions.
 
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#6 ·
Quote:
Originally Posted by jason387 View Post

Notice how we say Intel and Nvidia are hammering AMD. It's like two companies pitted against one. To be fair, if Nvidia or Intel had to do double the work, like AMD, I'm sure they won't be seated in the position that they are today. I'm no fan boy. I'm just pointing out a fact which many seem to overlook.
And you're overlooking that it's also AMD's fault that they're stuck as the losing side in a 2-front war.

Just like how Hitler chose to open a second front by invading Russia in 1941, AMD chose to open a second front in the semiconductor business by buying ATI in 2006. We all know what happened to Germany in 1945, and the same will happen to AMD sooner or later (probably sooner).
 
#7 ·
Quote:
Originally Posted by jason387 View Post

Notice how we say Intel and Nvidia are hammering AMD. It's like two companies pitted against one. To be fair, if Nvidia or Intel had to do double the work, like AMD, I'm sure they won't be seated in the position that they are today. I'm no fan boy. I'm just pointing out a fact which many seem to overlook.
Nvidia would not but Intel likely could. They waste so much money that the money on wasted project could easily budget GPU development.

What prevents Intel from doing so are the margins just aren't there for how much R and D costs. If it wasn't for Nvidia pummeling AMD in marketshare, they would barely be making money, particularly in the figures Intel fines desirable. Right now, GPU money and profits is a race to the bottom because the market is shrinking and so are sales.
Quote:
Originally Posted by Serious_Don View Post

It's obvious that AMD would be bought out as constantly brought up on these forums, so competition wouldn't simply vanish. The idea of no more AMD is a tough pill to swallow though but that's how it goes in the competitive world. We're nearing the end of silicon and advancements aren't as simple as smacking on more transistors and cranking up the clocks anymore. The "lower power" phase we're in right now is going to reach a brick wall soon enough as well.

Zen is looking to be good and I'll be grabbing a chip and Am4 board once available, the real question is can AMD sell it. A good product isn't going to save the company alone, there must be some kind of marketing campaign and push to get these chips in OEM machines. They are also in dire need of better pricing strategies, I don't see any reason why a die hard Nvidia user is going to jump over to fury for similar performance and no major discount. I also don't see a reason anybody running any Intel chip will make the jump when the performance per dollar is totally on Intel right now at every price point. 5 years ago the Phenom II lineup did so well because they were by far the best performance you could get in a chip for only $200 (or less), prior to that it was the same AND they were releasing flagship chips (tbird) to boot.

Surely they must realize the R9-290 is so popular because it is pound for pound the best performer by quite a margin for somebody looking to only spend around $270 on graphics? I know tons of people who just grabbed CFX setups of the tri-x 290 simply because of the performance per dollar. In this insane price $700-1100 GPU market, the Fury X would completely stamp out Nvidia's line up if AMD was just able to get it on the shelves at a lower price. Likewise, an 8 core Zen CPU doesn't have to beat a 4790k or better, it needs to be comparatively close and much cheaper. Fighting for the flagship isn't going to save a company when the money isn't in the premier performance market and never has been, they have to get into the average Joe's home and work PC again.

Just my opinions.
The problem for AMD is AMD is not in an enviable position and the war to beat Intel is going to be a long expensive battle. Plus they have a tonne of debt.

Considering AMD market capitalization of 1.7 billion or so which is peanuts for the IP and it's been lower than this, why hasn't anyone bought AMD yet.

The reason being is no one wants to buy a failing business if the cost the bring them up to par is an amount of money that makes even the richest company do a double take if they can afford it. What I mean is to make AMD competitive with Intel, it wouldn't take billions, it would take 10's of billions of dollars, particularly a fabless company. And even if you spent this amount, there's still a good chance you won't reach your goalpost. Add in it's a shrinking market due to ARM and you have no biters.

This is why ATIC hasn't talked about it at all lately. If ones company was going to do it, ATIC and the GF would have done it a long time ago.

The r9 290 is a very good card at $270, however the problem is it's not a profitable card for AMD at 270 dollars or the 250 price I have seen before. Think of the profit margins for the chips. The 290 series is one of AMD's most expensive chips to produce, but they have to sell the chips at 100 dollar apu level to achieve 270 dollar price point. Think of Asus's cut(plus they make and have to absorb the cut of everything else), newegg's cut, distributers cut(the suppliers for newegg).

Ever since maxwell forced the Price of AMD products downwards, AMD margins have taken blow after blow and they have taken 100+ million dollar loses. Given the warning from AMD, I am expecting another loss of 200 + million dollars, and another 100-150 million dollar blow to their cash pile, meaning 2-3 more quarters like this and they are done.

Zen is AMD's last stand if they can make it. If Zen doesn't exceed, AMD is good as bankrupt.
 
#8 ·
Everyone should have seen this one coming.

AMD will be struggling until Zen and "16nm" GPUs get here. That's the reset button for the CPU/GPU/APU markets that they need right now.

The interesting question is whether they'll be able to capitalize on that reset button. My guess would be a pessimistic one (surprising no one) but I guess we'll see.

IMHO what they need are these things:

1) Zen needs to be viable for high margin stuff. Slow and cheap isn't going to cut it. It needs to be ideal for servers and HEDT/WS. If it isn't then AMD will be completely at intel's mercy as they have been since BD was released.

2) Better GPU architecture. This on the other hand needs to go in the other direction as the CPU arch. Yes the good compute and good firepro cards can get AMD some professional marketshare but it's clearly often at the expense of potential huge margins (they're bargaining for the cheap mac pros while NV is dominating the big HPC wins due to software and interconnect advantages) but at the same time AMD has lost their die size, power and PCB complexity advantages. AMD needs something leaner that's not going to be at NV's mercy due to higher manufacturing costs. Also AMD pls, look at Cypress and deliver on time as you said you would.
 
#9 ·
Quote:
Originally Posted by Junkboy View Post

They're too far back and have virtually no chance to ever recover, there is no way out for them and we all know it.
At this point I have to agree that AMD might not survive as an independent company. The technology gap between Intel and AMD is already massive. Skylake will widen it further. I doubt if AMD can even match Broadwell in terms of IPC and performance (IPC * clock speed ).
Quote:
So with that said... who's the actual front runner to buy AMD? Samsung? Qualcomm? MS? too many conflict of interest for MS I think. I wish IBM would re enter the consumer market. Whoever it is I'm sure we'll be in better hands than we've been in.
I think MS will face a lot of opposition from goverment anti-trust agencies around the world. Samsung might be a good fit as AMD needs lot of money to beef up their R&D. AMD also need access to leading edge process nodes and to stay close behind Intel in terms of process node transitions. Anything more than a 9-12 month gap is just not going to work in the long run. AMD cannot compete with a process node deficit as they are already architecturally behind Intel. So even if they have a competitive architecture they need a competitive process node at the right time to deliver competitive products. For Samsung the more AMD can deliver competitive products and take market share from Intel and Nvidia the better it is for them as they can vastly increase the wafer volume and utilization of their leading edge fabs.
Quote:
What bums me out the most about this is ATI and what has now happened to the GPU division. $5.4 billion turned into nothing by AMD.
sad-smiley-002.gif
I think I'll keep my 4850, 4870, and 5870 E6 with their beautiful ATI branding.
sad-smiley-002.gif
I completely agree. AMD has destroyed the company which used to the market leader in discrete graphics till as late as 2010.

http://www.xbitlabs.com/news/graphics/display/20101027211059_ATI_Maintains_Lead_on_Discrete_GPU_Market_Mercury_Research.html

ATI was a bigger company than Nvidia before the AMD acquisition. Today ATI and AMD combined are having less revenue than Nvidia. What a destruction of shareholder value through years of bad management and failed products .
mad.gif


http://media.corporate-ir.net/media_files/IROL/10/105421/reports/ATI_Q206.pdf
http://www.nvidia.com/object/IO_29591.html
 
#10 ·
Quote:
Originally Posted by Alatar View Post

Everyone should have seen this one coming.

AMD will be struggling until Zen and "16nm" GPUs get here. That's the reset button for the CPU/GPU/APU markets that they need right now.

The interesting question is whether they'll be able to capitalize on that reset button. My guess would be a pessimistic one (surprising no one) but I guess we'll see.

IMHO what they need are these things:

1) Zen needs to be viable for high margin stuff. Slow and cheap isn't going to cut it. It needs to be ideal for servers and HEDT/WS. If it isn't then AMD will be completely at intel's mercy as they have been since BD was released.

2) Better GPU architecture. This on the other hand needs to go in the other direction as the CPU arch. Yes the good compute and good firepro cards can get AMD some professional marketshare but it's clearly often at the expense of potential huge margins (they're bargaining for the cheap mac pros while NV is dominating the big HPC wins due to software and interconnect advantages) but at the same time AMD has lost their die size, power and PCB complexity advantages. AMD needs something leaner that's not going to be at NV's mercy due to higher manufacturing costs. Also AMD pls, look at Cypress and deliver on time as you said you would.
Either or both but it has to be something, a strong competitor to Xeon would put AMD back in flight, but I just don't see it happening right now, thus I share your pessimistic view. I would be totally floored if a new lineup of Opertons came out that were able to take a bite out of the server market. I don't see AMD chips in servers anymore and I sure don't see them in office/consumer machines anymore, I see all G1850s and Pentiums. If Zen is really good enough they can attack both markets in a range of price points and do some damage. Weak server chips will probably translate to weak consumer chips as it is so a failure will crush them on both ends I believe. The next year will be a big change any way the coin toss lands.

as for GPU. I just don't know, with HBM2 around the corner once again it's going to come down to the new architectures, whichever company pushes out the fastest GPU is going to rule the market as usual.
 
#11 ·
Now that I think more about this... How are AMD's cash reserves? How many quarters like the few previous ones can they take at this point before they've gone through those reserves?
Quote:
Originally Posted by jason387 View Post

To be fair, if Nvidia or Intel had to do double the work, like AMD, I'm sure they won't be seated in the position that they are today.
The companies are too different for simple comparisons like this. For example intel also has fabs and Nvidia does some pretty heavy HPC R&D.

But even then I have to point out that technically even Nvidia is doing both CPU and GPU. They do have a CPU architecture as well as a GPU one. And intel quite obviously has both, they just don't bother with discrete cards.
 
#12 ·
Quote:
Originally Posted by Alatar View Post

Now that I think more about this... How are AMD's cash reserves? How many quarters like the few previous ones can they take at this point before they've gone through those reserves?
Somehow AMD claims that "cash and cash equivalents at the end of the second quarter are expected to be approximately $830 million, in line with expectations" despite the large shift in guidance.

But considering that Fury isn't the world-beater it needed in the high-end consumer GPU market, Zen is still a long way off, and 90% of AMD's current lineup of consumer products is either rebrands (300-series, Godavari) or just straight-up ancient (Vishera), I don't see any tangible improvement in the near-to-mid future if at all.
 
#13 ·
Quote:
Originally Posted by svenge View Post

Somehow AMD claims that "cash and cash equivalents at the end of the second quarter are expected to be approximately $830 million, in line with expectations" despite the large shift in guidance.
AMD had a USD 906 million cash and cash equivalents balance at end of Q1 2015 and a USD 500 million line of ABL (Asset based lending) financing. AMD will survive till they get Zen. But the question is can they succeed with Zen ? Right now even I (being a die-hard AMD supporter) am quite pessimistic.

http://ir.amd.com/phoenix.zhtml?c=74093&p=irol-analystday
Quote:
But considering that Fury isn't the world-beater it needed in the high-end consumer GPU market, Zen is still a long way off, and 90% of AMD's current lineup of consumer products is either rebrands (300-series, Godavari) or just straight-up ancient (Vishera), I don't see any tangible improvement in the near-to-mid future if at all.
The next 12-18 months will be very painful as Intel starts to ramp Skylake in late 2015 and further pummels them and Nvidia cements their GPU market share dominance with > 80% market share.
 
#14 ·
Alright, at this point I'd bet on Samsung already. Sure they can wait till Zen with the cashreserves and then what? At that point they might be already beld out and Zen isn't going to magically get them out of it.

I'm sorry for saying this but Dr. Su has made some bad choices. Not to mention the ones before her.

Where's discovery? Why did they abandon AM3 even tho it's old? The heck is with all these rebrands? Pushing their ARM back to 2017...oh well.
 
#15 ·
There comes a time where investors get fed up and no amount of management shuffling will restore their confidence. We have kicked this dead horse, AMD, for son long, I do not believe it is worth repeating everything all over.
thumb.gif
 
#16 ·
AMD going down the drain? Shocker.
rolleyes.gif


Here is what happened on Fury X launch:

  • From the company that brought you these slides to prepare people for Fury X launch where we thought HBM and AMD would finally crush the competition:



    To the harsh reality that met exited gamers like myself where the card actually was equal to 980Ti and a good deal slower in lower resolutions.
    With it, interest dropped like a rock all over the internet. AMD managed to actually dissappoint rather than amaze. All because they teased something different than they offer.
  • To add further insult, the company was bashed before launch because they seem to cherrypicked reviewers for their cards. KitGuru wrote a story that AMD refused to give them samples because they had a "negative stance" against them and they only wanted positive reviews for their Fury cards. Of course that didnt stop the other reviewer sites to say "Fury X didnt quite match 980Ti".
  • Then there was many noise complaints about the Fury X cards where the first cards had a faulty pump with whining. Which several news sites wrote a story about.
  • Then there was the complaints from retailers that said they only recieved few cards to sell, and the shops have been outsold ever since the first day. The card is essentially vapourware right now.
  • AMD used to offer better performance/dollar than Nvidia before and that is why many bought their cards. Now however, AMD is equal to Nvidia in performance/dollar in 4K but offer worse value for 1600p/1440p. So the customer group they used to cater for earlier which was very price oriented they have now abandoned.

Finally they got a new card with great efficiency (which they btw should have focused marketing more about) and a chip that offer great performance and they manage to butcher their cards like this. Is it any wonder why AMD is going down the drain? They dont seem to know what they are doing
doh.gif
 
#20 ·
Quote:
Originally Posted by Serandur View Post

This would be far less painful if they weren't dragging the remains of ATi to the grave with them.
thumbsdownsmileyanim.gif
agreed. It pains to see a wonderful company called ATI which is in fact older than Nvidia being destroyed. I have just intense hatred for that person called Hector Ruiz who started the demise of AMD.
mad.gif
 
#21 ·
Quote:
Originally Posted by raghu78 View Post

agreed. It pains to see a wonderful company called ATI which is in fact older than Nvidia being destroyed. I have just intense hatred for that person called Hector Ruiz who started the demise of AMD.
mad.gif
I am not sure about the internal workings of the merger but what exactly did AMD do that tarnished ATI or made them worse?

It wasn't like ATI was a huge brand leader thanks to Nvidia fanatics and Nvidia's shady tactics in the first place. So how did AMD getting bought out destroy ATI or make them worse? I am earnestly asking because I hear this all the time yet noone has actually explained it
 
#22 ·
as long as AMD DX9/10/11 CPU overhead are higher than Nvidia's, I will not buy AMD GPU ever again. It is a piece of junk if they cant fix this problem.
 
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#23 ·
Well this "Outlook" isn't really that surprising.

Quote:
Originally Posted by svenge View Post

The key take-aways of the announcement are these:

  • 2Q15 revenue down 8% sequentially (previous guidance was 3% down)
  • 2Q15 non-GAAP gross margin 28% (previous guidance was 32%)
  • Weaker than expected OEM PC product demand for APUs
  • $33m charge for switching 20nm designs to "leading gen FinFET node"
Note that AMD stock was at $2.47 (down .06) at the close of trading today, but has plummeted in after-hours trading to $2.13 (down another 34 cents, or 14 percent) as of this post. It dropped so fast that a trading halt was placed on the stock for about 15 minutes!
The only thing I'm wondering right now is how much money you could have made at the stock market if you placed bets with high leverages on AMD stock losing worth directly after this announcement came out...
 
#26 ·
Quote:
Originally Posted by Serious_Don View Post

It's obvious that AMD would be bought out as constantly brought up on these forums, so competition wouldn't simply vanish. The idea of no more AMD is a tough pill to swallow though but that's how it goes in the competitive world. We're nearing the end of silicon and advancements aren't as simple as smacking on more transistors and cranking up the clocks anymore. The "lower power" phase we're in right now is going to reach a brick wall soon enough as well.

Zen is looking to be good and I'll be grabbing a chip and Am4 board once available, the real question is can AMD sell it. A good product isn't going to save the company alone, there must be some kind of marketing campaign and push to get these chips in OEM machines. They are also in dire need of better pricing strategies, I don't see any reason why a die hard Nvidia user is going to jump over to fury for similar performance and no major discount. I also don't see a reason anybody running any Intel chip will make the jump when the performance per dollar is totally on Intel right now at every price point. 5 years ago the Phenom II lineup did so well because they were by far the best performance you could get in a chip for only $200 (or less), prior to that it was the same AND they were releasing flagship chips (tbird) to boot.

Surely they must realize the R9-290 is so popular because it is pound for pound the best performer by quite a margin for somebody looking to only spend around $270 on graphics? I know tons of people who just grabbed CFX setups of the tri-x 290 simply because of the performance per dollar. In this insane price $700-1100 GPU market, the Fury X would completely stamp out Nvidia's line up if AMD was just able to get it on the shelves at a lower price. Likewise, an 8 core Zen CPU doesn't have to beat a 4790k or better, it needs to be comparatively close and much cheaper. Fighting for the flagship isn't going to save a company when the money isn't in the premier performance market and never has been, they have to get into the average Joe's home and work PC again.

Just my opinions.
I would not bet on it. Technically VIA is still doing "some" x86 so even if AMD would be outright closed Intel might not be monopoly to the regulators on paper for a while. It seems also highly unlikely that AMD would be outright closed even if it's in deep trouble. With all the quantitative easing flying around someone, perhaps, for example, Chinese, would just buy it out in it's entirety just for getting the know-how.
 
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