Wins in the console sector have paid off handsomely
On hindsight, AMD absolutely made the right decision to purchase ATI, an acquisition that was met with some skepticism among analysts at the time. What those analysts couldn't have predicted is that several years later the PC market would find itself in a slump, leaving AMD to lean heavily on its graphics division. In doing so, AMD posted a profit of $89 million, or 12 cents a share, in the fourth quarter of 2013, rebounding from a $473 million loss, or 63 cents a share, a year prior.
Revenue from AMD's Computing Solutions segment decreased 9 percent sequentially and 13 percent year-over-year, which the Sunnyvale chip designer blamed on sagging chipset and notebook unit shipments. In terms of dollars and cents, AMD's PC unit recorded an operating loss of $7 million.
On the flip side, AMD's Graphics and Visual Solutions division increased its revenue by 29 percent sequentially and a whopping 165 percent year-over-year. AMD credited its semi-custom SoCs for fueling this growth, underscoring how important it was to land contracts with both Microsoft and Sony to power their recently launched consoles. Operating income for graphics came to $121 million in the fourth quarter of 2013.
"Strong execution of our strategic transformation plan drove significant revenue growth and improved profitability in the fourth quarter," said Rory Read, AMD president and CEO. "The continued ramp of our semi-custom SoCs and leadership graphics products resulted in a 38 percent revenue increase from the year ago quarter. Our focus in 2014 is to deliver revenue growth and profitability for the full year by leveraging our differentiated IP to drive success in our targeted new markets and core businesses."
Unfortunately for AMD, the immediate future doesn't look quite as bright. The chip designer said it expects revenue to decrease 16 percent, plus or minus 3 percent, in the first quarter of 2014.