AMD: Buy This Tech StockAMD) announced fourth quarter ended December 26, 2015 total revenue of $958 million, down 10 percent sequentially from $1.06 billion in third quarter of 2015 and down 23 percent year-over-year from $1.24 billion in fourth quarter of 2014. However, AMD somewhat managed to exceed the consensus revenue estimate for the quarter of $954.7 million.
AMD declared fourth quarter of 2015 non-GAAP net loss of $79 million or $0.10 of loss per share compared to net loss of $136 million or $0.17 of loss per share in third quarter of 2015 and non-GAAP net income of $18 million or $0.02 per share in fourth quarter of 2014.
The global semiconductor company reported continued sequential decline in both its top and bottom lines primarily due to seasonally poor sales of semi-custom SoCs.
Focusing in the right direction
AMD is focused on maintaining a strong cash position with a target of achieving approximately 90% of cash preserved domestically and rest that could be repatriated in addition to nearly $69 million of debt interest expenses paid during third quarter of 2015. Further, AMD is observed to be keen on controlling year-over-year capital expenditures while strategically implementing a funding roadmap. Therefore, the company has achieved approximately 28 percent reduction in non-GAAP operating expenditures to a targeted $320 million in fourth quarter of 2015 from $469 million in first quarter of 2013.
The worldwide semiconductor company is uniquely growing its global foundries expenditure with present 2015 WSA obligation of approximately $1.1 billion and including, development of some GPU and semi-custom game console products along with take-or-pay commitment. Also, there is no other particular expense besides take-or-pay in addition to the key ongoing conversations with global foundries to redesign the company’s 2015 wafer acquisition obligations.
AMD also has a superior debt maturity profile with no short-term debt maturities pending till March 2019. Importantly, weighted average interest rate of term debt is nearly 7.2% till September 26, 2015 and net ABL borrowings have remained flat sequentially at $230 million by the concluding third quarter of 2015.
The notably healthy balance sheet of AMD with significant free cash flows and no near-term debt maturities is primarily due to strategic capital allocation which is targeted towards delivering outstanding company growth while delivering impressive shareholder returns and in line with its commitment.
AMD recently introduced the innovative R-series SoC processors, designed on Carrizo that expands the company’s performance control for networking, media storage and communications, electronic gaming, medical imaging, retail and digital signage. The platform also comprises of 3rd generation processing architecture with GPU GCN that is best-suited for intense visual requirements and delivering enhanced power solutions for minimum energy consumption, making the company a leader in thin client market.
For semi-custom solutions, AMD witnessed notable game console SoC unit deliveries during third quarter of 2015. Going forward, the company estimates significant strength in game console SoC with impressive year-over-year growth of units during 2016 and extra wins projected to be recorded during the second halves of 2016 and 2017 by utilizing robust ability to make strategic partnerships with customers and logically use differentiated IP.
The semiconductor major is strategically transitioning from just serving the global computing and graphics industry since last three years starting 2012 and having about 90 percent revenue contribution to the company’s balance sheet to present situation where enterprise, embedded and semi-custom segments in total contribute approximately 50 percent to the overall company’s top line.
The introduction of new graphics processors to be implemented in major systems being used by key enterprises coupled with planned shift towards semi-custom, embedded and enterprise segments is believed to uniquely diversify the company’s revenue streams and thus, deliver sustainable long-term growth.
Published on Jan 29, 2016By Vinay Singh