Today AMD announced their Q1 FY 2019 earnings. Revenues were down 23% year-over-year, coming in at $1.27 billion. Gross margin for the quarter was 41%, up 5% from a year ago, but operating income was down 68% to $38 million. Net income was down 80% to $16 million, and earnings-per-share were down 87.5% to $0.01. But why?

AMD Q1 2019 Financial Results (GAAP)
  Q1'2019 Q4'2018 Q1'2018
Revenue $1272M $1419M $1647M
Gross Margin 41% 38% 36%
Operating Income $38M $28M $120M
Net Income $16M $38M $81M
Earnings Per Share $0.01 $0.04 $0.08

AMD’s recent success has been driven primarily by their Computing and Graphics segment, however revenue for this segment was down 26% from a year ago, coming in at $831 million. AMD is stating that lower graphics channel sales are the primary reason, and with the crash of cryptocurrency, this makes sense. However, the decline was offset by increased client processor and GPU sales. Operating income for this group was $16 million, compared to $138 million a year ago.

AMD Q1 2019 Computing and Graphics
  Q1'2019 Q4'2018 Q1'2018
Revenue $831M $986M $1115M
Operating Income $16M $115M $138M

Enterprise, Embedded, and Semi-Custom revenue was down 17% from a year ago, coming in at $441 million. The decline can be mostly attributed to declines in semi-custom revenue, which is mostly consoles that have been on the market for quite a few years now, but some of the decline was offset by higher server sales, and AMD stated that their margin growth for this quarter was driven by the ramp of Ryzen and EPYC processor sales, as well as datacenter GPUs. Despite lower revenue, the operating income for this group is up 385% to $68 million, although $60 million of that is attributed to a joint venture with THATIC.

AMD Q1 2019 Enterprise, Embedded and Semi-Custom
  Q1'2019 Q4'2018 Q1'2018
Revenue $441M $433M $532M
Operating Income $68M -$6M $14M

All Other had an operating loss of $46 million, compared to a loss of $32 million a year ago.

AMD also announced that their Navi GPU and Rome CPU are going to launch in Q3 of this year which should help bolster sales then, but may impact short-term sales as customers wait for the new products to launch. AMD is forecasting revenue for Q2 to be down approximately 13% year-over-year, with a forecast of $1.52 billion plus or minus $50 million.

Source: AMD Investor Relations

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  • Korguz - Thursday, May 2, 2019 - link

    sa666666 i agree... ANY post he can.. he will bash amd.. but praise intel... even if the article/write up is negative against intel. i would also like to know who he considers as " most " no one i know who uses desktops, would even consider an all in one.. not everything " has gone mobile " as he says. then to complain about fanboy stuff, when HE HIMSELF is a fanboy.. wow... too bad, sa666666, if you notice.. when some one calls him out on his posts.. he doesnt reply.. so i doubt he would reply to you, or this post...
  • lejeczek - Wednesday, May 1, 2019 - link

    There might be no need to wait - Ryzen 5 2600 today for £130? Crazy!!!
  • sgeocla - Wednesday, May 1, 2019 - link

    Everybody knows that Q1 is the lowest in the year, on top of crypto sales of last year.
    Intel keeps bringing up "China" instead of acknowledging AMD is eating their lunch in the datacenter.
    7nm is going to bring in a whole level of hurt for Intel and Nvidia to a lesser extent.
  • Dotans - Wednesday, May 1, 2019 - link

    lower Q1 from prev Q4 is regular annual trend.
    lower Q1 from prev Q1 is long term trend and its mean bad news.
    AMD is expected to grow very fast (PE >80) with strong product line and Intel struggle with production.
    The stock looks like a bubble.
  • Targon - Wednesday, May 1, 2019 - link

    If you look at product by product, things don't look as bad. GPU is lower, and current-gen console sales is going to remain low as the focus for many is the next generation consoles. So, server, desktop, and workstation sales won't seem as bad as the overall.

    The long-term outlook is better because: 7nm Ryzen, Threadripper, and Epyc will drive very good sales numbers. Navi, if performance is GTX 1070 level for $250 will also sell well. Into 2020, AMD will have the 7nm laptop chips, probably Q4 2019 or Q1 2020, and those will sell VERY well for the performance increase combined with lower power demand of 7nm. 7nm desktop APUs in 2020 will also drive sales on the lower end, especially for OEMs(which are always looking for low end, you don't see a lot of desktops from OEMs with discrete graphics in the $500-$600 range).

    AMD also has an all new GPU architecture in the works, which I expect will be competitive with high end NVIDIA when it comes out. New architectures need to be forward looking, which is why Ryzen has been doing well.
  • webdoctors - Wednesday, May 1, 2019 - link

    They only earned $16M ? 1.2B in revenue? A bank account with 5% interest would've given you more money than that per quarter, and I'm not even using their market cap value of $30B. They need to raise prices or margins.
  • BedfordTim - Thursday, May 2, 2019 - link

    You won't get a bank account with 5% interest but even at 1.5% your point is still valid. The theory is that with rising sales margins will improve significantly as overheads are pretty much fixed.

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