AMD Back in Black After Inking Lucrative Console Gaming Contracts

Paul Lilly

Finally, a profitable quarter

Microsoft's Xbox One and Sony's PlayStation 4 consoles feature AMD hardware inside, and it's primarily because of those deals that the Sunnyvale chip designer was able to return to profitability this past quarter. AMD said it made a profit of $48 million on revenue of $1.46 billion in the third quarter of 2013, compared to a $74 million loss in the previous quarter and a whopping $157 million loss in the same quarter one year ago.

"AMD returned to profitability and generated free cash flow in the third quarter as we continued to successfully execute the strategic transformation plan we outlined a year ago," said Rory Read , AMD president and CEO. "We achieved 26 percent sequential revenue growth driven by our semi-custom business and remain committed to generating approximately 50 percent of revenue from high-growth markets over the next two years. Developing industry-leading technology remains at our core, and we are in the middle of a multi-year journey to redefine AMD as a leader across a more diverse set of growth markets."

It's good news for AMD that it managed to turn a profit again, but also concerning in how that money was made. AMD's CPU business actually declined 6 percent sequentially and was down 15 percent year-over-year. AMD blamed the declines on decreased notebook and chipset unit shipments.

AMD's profit came from serving consoles. The company's Graphics and Visual Solutions (GVS) business, which includes semi-custom products like the chips found in the Xbox One and PS4, jumped up 110 percent sequentially and 96 percent year-over-year. While a little concerning, this isn't necessarily a bad thing for AMD if it can continue to serve this market without hiccups.

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