AMD made a profit


Oct 8, 2009

<I>AMD reported operating income of $1.288 billion in the quarter, including a net favorable impact of $1.224 billion.</I>

AMD made $1.288 billion. Mainly because Intel contributed $1.224 billion. Considering they always lose money, even without Intel, this is good.

<I>AMD redeemed the remaining amount outstanding of its 7.75% Senior Notes due 2012 (approximately $390 million), reduced the aggregate amount outstanding of its 5.75% Convertible Senior Notes due 2012 by approximately $1 billion and issued $500 million of 8.125% Senior Notes due 2017. In the fourth quarter, AMD decreased its debt due in 2012 by nearly $1.4 billion, to $485 million.</I>

They took the money from Intel and retired some debt due in 2012. Good.

They rolled over about $500 million into debt due in 2017. They pay 8.125% interest on the new debt and only 5.75% on the old debt that was due in 2012. Not so good.

In essence, they paid off $1.39 billion in debt and borrowed $0.5 billion. For a net payoff of about $0.9 billion. The other $350 million they got from Intel, they're hanging on to.

Their graphics division grew revenues from $306 million in Q3 to $427 million in Q4. Profits went from 8 to 53 million. Basically they make money from ATI and lose money from everything else. ATI has been great lately. Everything else, not so great.

My take...
Overall good. Not great. They made money even outside of Intel, but they had everything going for them. nVidia is stumbling badly and it's the Christmas quarter. It will be challenging, but not impossible, to continue the current trend.

Some will look at Global Foundaries as a future growth engine. I'm skeptical. It's hard making money in the fab business and it takes a lot of risk capital. Not a good business to be in. At best, GF profit margins will only be 10%.
Wow, it is good to see the ATI division doing great last quarter (which you would expect, but still it is good to see). But I agree as well that if they cannot turn around the CPU division, they will be in for some very rough times as we can only assume NVidia will make a comeback at some point and force ATI to lower prices.