AMD Q2 2016 Earnings Call Notes

Advanced Micro Devices Lisa Su on Q2 2016 Results

The Radeon RX family resets expectations around the experiences and features gamers now want

“Our strong second quarter graphics performance was capped by the launch of our new Polaris-based RX 480 GPUs at the end of June, which helped contribute to our highest desktop channel GPU shipments since the fourth quarter of 2014. The Radeon RX family resets expectations around the experiences and features gamers now want in a mainstream GPU. We are pleased with the Polaris launch, initial channel sales, and OEM design wins. We expect this strong demand to continue and help drive revenue growth in the third quarter, with the launch of the RX 470 and RX 460 desktop GPUs and Polaris-based notebooks from our OEM customers.”

Microsoft announced two new members of the Xbox One family powered by AMD

“Last quarter, at E3, Microsoft announced two new members of the Xbox One family powered by AMD. The Xbox One S is the slimmest Xbox console ever and the first to support HDR. The system is expected to go on sale in the coming weeks. Microsoft also announced their next generation game console, codenamed Project Scorpio for the 2017 holidays. Project Scorpio is designed to be fully compatible with existing Xbox One software while leveraging AMD’s leadership gaming technologies to create more immersive 4K and VR gaming experiences.”

Semi-custom shipments to peak for the year in the third quarter

“As in the previous two years, we expect semi-custom shipments to peak for the year in the third quarter, as both Microsoft and Sony prepare for the holidays. Based on strong demand, we believe semi-custom unit shipments and revenue will grow on an annual basis.”

Net loss was $40 million with loss per share of $0.05

“Net loss was $40 million with loss per share of $0.05, calculated using 794 million basic shares in the quarter. We recorded a pre-tax gain of $150 million, related to the ATMP JV transaction, an equity loss of $3 million based on our 15% ownership stake and taxes of $27 million related to the JV transaction. Adjusted EBITDA was a positive $36 million, compared to negative $22 million in the prior quarter.”

AMD 4Q15 Earnings Call Notes

Advanced Micro Devices’ (AMD) CEO Lisa Su on Q4 2015 Results

Buzz in VR is focusing the gaming industry back on the PC platform

“buzz and interest in VR is an exciting trend that is focusing the software industry’s attention and some of its brightest minds back on the PC platform.”

GPUs are key to VR experience

“While the initial wave of VR will be focused on gaming, an increasing number of developers see VR as the most significant advancements in how we interact with technology, continued [ph] reduction of the mouse and graphical user interface. Most importantly these break through software experiences will only be enabled with high performance energy efficient GPU’s.”

x86 has the momentum in the datacenter

“We still see ARM strategically as an interesting market for the infrastructure market, but it is certainly developing bit slower than expected…I think it’s more of a market statement, Vivek than an AMD specific statement. I think the overall commentary, maybe if I just expand a little bit is, the datacenter market is really-really interesting and I think we all agree with that. I think x86 has a lot of momentum and that’s one of the reasons that we’ve put quite a bit more emphasis on our x86 datacenter and infrastructure play. That being said I think ARM does have a lot of specific areas where it can contribute and it has done so. But I would say in servers in particular perhaps slower than originally expected, but still something to watch for the medium term.”

PC market is forecast to decline low single digits, but may be more like mid single digits

“if you look at the current market projections it’s somewhere in the low single digits, I think if you were to talk to the customer set, it might go from low single digits to mid-single digits. So that’s the environment that we are you know forecasting unit share growth.”

Pleased with our execution on engineering changes

“I will say that I am pleased with the execution on engineering that we have accomplished over the last 12 months. I think we have passed some significant hurdles. The transition to FinFET for us was very-very critical across our businesses. And I feel good about the state of the progress there.”

VR could require custom work

“So I think there are opportunities to do customer implementations of GPU for virtual reality. I think the amount of graphics horsepower that’s required and perhaps some of the form factors that you want to go into being smaller more portable would enable you to do that. I think it’s early to talk specifics but I think that the general ideal that VR has a lot of requirements and doing something custom might be helpful, I think is absolutely on the mark.”

In professional graphics the hardware is good we haven’t invested enough in software

“When you talk about professional graphics, I think it’s such a specialized market that it is more about the product you offer and is it competitive and differentiated enough. I think it’s fair to say that most of our customers would say the products are actually very good. So the overall product capability and performance is good. Our issue has really been are we investing enough in the software resources to help customers use some of our products.”

Miscellaneous Earnings Call Notes 10.22.15

Advanced Micro Devices’ (AMD) CEO Lisa T. Su on Q3 2015 Results

Not anticipating that Windows 10 will drive PC refresh

“While we are not anticipating Windows 10 will drive a dramatic near-term PC refresh cycle the continued adoption of Windows 10 which has already been installed on more than 110 million PCs to date, provides a great opportunity for AMD over the coming year based on a semi-consumer and commercial refresh cycle environment”

Suntrust Banks’ (STI) CEO Bill Rogers on Q3 2015 Results

We’ve been in the lower for longer camp for a long time and think it stays that way in ’16

” We, as you know in our case, we have sort have been in the lower for longer camp for some time and set ourselves up appropriately for that type of an approach. As we look forward into ‘16, I think also lower for longer stays, I think if there are Fed increases, they will be very deliberate and the pace of rate rise will probably be slower now than the market had been thinking six months ago.”

Capital Markets activity should be better this quarter

“M&A had another really good quarter and pipelines are still good there. The volatility numbers are in sort of high yield bonds and the equity sales and trading and that’s better. Spreads have come in. I think things will get done more this quarter than they did last quarter if things stay stable. And based upon what I see in terms of our pipeline, I feel good about our pipeline”

CCAR has changed the way that the whole banking industry is thinking about risk

“I think one of the other benefits also that you see for SunTrust and perhaps for the industry overall is the benefit of CCAR. The CCAR has changed the way that companies think about their overall risk. They apply a stress test to all their portfolios now and think about how portfolios would behave during a stress test.”

Kansas City Southern’s (KSU) CEO David Starling on Q3 2015 Results

Volume continues to improve in October

“volume so far in October continue to improve. And subject to ongoing uncertainty in energy markets, we feel good about the trajectory of demand as we head into the end of 2015. Through the close of business, Wednesday, average daily carloads for October were running about 1% higher than September and 1% higher than October of last year as well.”

Business demand still feels very good to us

“business demand still feels very good to us, with the obvious caveat about the uncertainty in energy markets, which you have seen across the entire rail sector, have made it more difficult to forecast demand and provide guidance.”

Mexico is probably linked to the US, but they’ve done a good job managing their inflation and unemployment rates

“I think, Mexico ends up being fairly tightly linked with the U.S. economy, given the amount of goods that end up going north into the U.S. But they’ve done a really good job managing their overall inflation rate, which is now running below 2%, unemployment is below 5%.”

Hasbro’s (HAS) CEO Brian Goldner on Q3 2015 Results

Toy industry growth is strong ytd

“The trends that we see and the data that we have would indicate that the Toy industry year-to-date is up high-single digits, and we see that as boding well as we get into the holiday season and continues our trends.”

Labor is the biggest cost input to our COGS and it’s up in the double digit range

“The single biggest cost input to our cost of goods is labor. And we continue to see labor inflation rates in the double-digit range. We have seen a slight decrease in the cost of certain types of resins over the period since the end of 2014. But they tend to be more nominal and they run in arrears to whatever the petroleum or gasoline costs prices are out there as you know.”

Flextronics International’s (FLEX) Mike McNamara on Q2 2016 Results

Partnering with Nike for connected products

“Last week, during NIKE’s Investor Day, NIKE announced a partnership with Flex to accelerate the introduction of advanced innovation to NIKE’s manufacturing supply chain. Working together, NIKE and Flex will deliver innovation that enables product to reach consumers more quickly with customized solutions and increased performance innovations.”

There’s an electrification of the world going on and we can help mechanical companies adopt that

“the amount of electrification in the world, the amount of smart products in the world that are going into what’s not typically electronic products that are now moving forward, whether it’s anything from a shoe to a shirt to a door lock is tremendous. So you’re getting a tremendous amount of this electrification of the business. And as we look forward, the value to us is if we can create more value for these customers whether it’s automation or engineering or making a non-connected product connected or providing electrification where they’re more traditionally a mechanical type company”

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q3 2015 Results

Energy chargeoffs are from borrowers that were already weak in the last cycle

“the charge-offs have fundamentally been borrowers that were weak in the last cycle, they’ve been kind of limping along, and for whatever reason, you know, we have not been able to get totally out, and this recent downturn was just kind of another very difficult blow to them.”

Restraining loan growth because concerned that we may find ourselves in another downturn before things get better

“I think that, you know, I for one have a concern that we may find ourselves set [ph] into another downturn before we see the economy strengthen a great deal again, I mean. So we’re trying to be very careful.”

Hawaiian Holdings’ (HA) CEO Mark Dunkerley on Q3 2015 Results

Hawaiian airlines has had a tough time getting flights in on schedule

“It’s been a poor summer operationally as reflected in our having recently posted our worst monthly punctuality in over a decade. The culprits have been several; the combination of a burgeoning flight schedule of Honolulu and airport construction has meant that during the peak hours of the day there have been insufficient gates. This has been exacerbated by congestion in customs, resulting in our not being permitted to de-plane arriving international passengers promptly. And lastly, an abrupt change in the traffic control procedures at Honolulu gave us no opportunity to make schedule changes to address the lengthen block times that have resulted.”

Yahoo! (YHOO) Marissa A. Mayer on Q3 2015 Results

Experiencing continued revenue headwinds

“our Q4 outlook, which Ken will return to later, is not indicative of the performance we want. While there are some well-known headwinds, year over year and even quarter over quarter like the loss of the Alibaba TIPLA, we are also experiencing continued revenue headwinds in our core business, especially in the legacy portions”

ACE’s (ACE) CEO Evan Greenberg on Q3 2015 Results

Underwriting environment continued to grow more competitive

“I want to now say a few words about current commercial P&C market conditions. The underwriting environment continued to grow more competitive in the quarter for our commercial P&C business globally. With some exceptions, price declines accelerated modestly. They were varied by class of business and geography.’

Large account more competitive, wholesale and property

“Large account business, particularly shared and layered is more competitive than midsized. Wholesale is more competitive than retail and property more so than casualty related”

Kimberly-Clark’s (KMB) CEO Tom Falk on Q3 2015 Results

The rate of currency deterioration hasn’t been as severe as it was

“The rate of currency deterioration hasn’t been as severe as it was, say, a year ago. On the other hand, there’s still some opportunity for price in some markets.”

Not seeing trade down in EM

“so far we are not seeing as much as a trade down as you would think. And we are still seeing — we launched boy/girl diaper pants in some of the super premium kind of tiers. We are seeing good response and growth there… particularly the economies that are in recession like Brazil and Russia, we are watching that see how the consumer performs and make sure we got the right offer, but we are also seeing really good innovation. Mom still wants the best for her baby.”

Texas Instruments, Incorporated. (TXN) Q3 2015 Results

It’s a weak environment but some segments were stronger than we expected

“our revenue declined 2% from a year ago, and we obviously would describe that as a weak demand. That’s actually similar to what we saw last quarter. But, inside of that, certainly it was stronger than what we had expected. There were a couple of areas that were stronger than we had expected. Wireless infrastructure and industrial were both stronger than what we had expected. ”

Kinder Morgan’s (KMI) CEO Steve Kean on Q3 2015 Results

By 2030 gas should be 39% of electric generation mix

“Its projected increase from today’s level of 76 Bcf a day to about 110 Bcf a day by 2025, that’s an increase of 40%.”

” If you look at the 15 mix of generating output and this is according to the EIA, 32% is gas and 33% coal. For those of you who have been in this industry a long time or followed it you know that that represents a dramatic shift to the positive for natural gas. If you flash ahead again these are EIA numbers to 2030 their projection of the mix of generation is 39% gas, 18% coal’

Renewable energy will need natural gas facilities as backup

” reliable flexible natural gas facilities are absolutely necessary to back up wind and solar. So to sum up the idea that we could move directly from coal to renewables without increasing natural gas usage for electronic generation is an unrealistic pipe dream with the substance and the pipe being legal only in Colorado and Washington State.”

Danaher (DHR) Thomas Patrick Joyce on Q3 2015 Results

Seen some incremental slowing, but in pockets

“Overall, we have seen some incremental slowing in the macro. That being said, it’s in pockets. There’s some pockets regionally where we’ve seen some of that slowing, clearly, and in some of the more industrially oriented markets.”

China is still one of our better markets

“we’ve actually seen China, while slowing incrementally, it’s still one of the better markets where we play today. Our growth rates continue to be very good in a number of our businesses. ”

AMD 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha


“In my 100 days as AMD’s CEO, I’ve had the opportunity to spend significant time with our customers, partners and employees. The consistent theme is that AMD is at our best when we are delivering differentiated technology and innovation to our customers.

Have to stabilize PC

“First, we see a path to reversing the declines in our PC business…We plan to introduce a strong 2015 product portfolio, punctuated by the launch of Carrizo in the second quarter. Consumer and commercial design win momentum for Carrizo continue to gain momentum because it will deliver the largest ever generational leap in performance per watt for our mainstream APUs.

Increase R&D in enterprise, embedded and semi-custom

“Second, we will increase our R&D investments in enterprise, embedded and semi-custom. AMD is the only company in the industry that can offer a full continuum of high-performance standard and custom solutions

Need to normalize the business in the near term

“In the near term we will take significant steps to normalize our business as we sharpen our focus on our key priorities of building great products, deepening our customer relationships, and simplifying our business

How we win back server market share

“So there’s no secret that we’ve lost a lot of market share in the server business. But if you look at fundamentally what’s important to those server customers, it is about knowledge of the enterprise, it is about high performance, you know, compute capability, reliability, all the system capability. And those are things that AMD can, you know, is uniquely very capable of.

x86 is still going to be the majority of the server market for a long time because that’s what applications are written for

“So when we look at ARM and x86, I would say, you know, the majority of the — the majority of the market will still be x86 for quite some time because of all of the legacy applications that exist. ARM offers a new opportunity in some of the dense server markets, and so we continue to look at that as a growth opportunity where new business will grow. So it’s really I would say separate parts of the market.

We really are a technology company

“So, Vivek, I mean if I just take a step back and just talk about what we’re trying to do overall in our strategy, we really are a technology company. It’s all about our IP and our products and what we put in the marketplace.

We’ve gotten hit in CPU and GPU, but It’s a big market though so there is room to add value

“And then on the computing and graphics business, I do believe that we will stabilize this business. I mean the last couple of years have been difficult, some relative to market conditions, some relative to things that we could have done better. But overall it’s 300 million units. That’s a big market. And so most every customer would agree that AMD can add value in that space and we’re focused on making sure that our products really add value to that ecosystem.

We are designing 14nm products

“ we are actively designing a number of products in 14 — the 14-nanometer technology. I think that will be very important for us in — from a competitive standpoint. So it’s an important technology for us.

Console sales have been strong

“relative to historical, I think most people will say that historically the game console shipments in this generation are higher than in the previous generation. And you can come up with all kinds of reasons for that, some of that is sort of the price points that they’ve chosen. I think that certainly helped the holiday season. Some of that is software titles that are available at a given point in time.

Our mobile products are competitive

“ It’s clear that our mobile products are very competitive. We’ve invested heavily in mobile. And you see that with some of the successes that we’ve had. Relative to desktop, mobile and desktop actually share a lot of technology.