AMD Reports First Quarter Results
– First Quarter EPS of $0.38 Driven by Record Sales of AMD Opteron™ Processors and Record Gross Margin –
SUNNYVALE, Calif. --
AMD (NYSE: AMD) today reported sales of $1.33 billion, operating income of $259 million, and net income of $185 million, or $0.38 per share for the quarter ended March 26, 2006. These results include a stock-based compensation expense of $15 million due to the implementation of SFAS 123(R) and an expense of $20 million associated with the partial redemption of senior notes.
In the first quarter of 2005, excluding the Memory Products segment1
, AMD reported sales of $780 million and operating income of $64 million. In the fourth quarter of 2005, AMD reported sales of $1.35 billion and operating income of $268 million.
|| Q1-06 vs Q4-05
|| Q1-06 vs Q1-05
|Net sales (billions)
|Operating Income (millions)
| Gross Margin (percent)
|| 1.2 % points
|| 5.8 % points
“AMD had another great quarter,” said Robert J. Rivet, AMD’s chief financial officer. “Building on our positive momentum, we believe we once again gained dollar market share based on strong customer demand for AMD64 single and multi-core processors. We expanded our global customer base in the quarter, achieved record AMD Opteron processor sales, increased our average selling price (ASP), and realized year-over-year sales growth of 71 percent. Our manufacturing strategy execution was excellent and our technology transitions remain on track, with 65nm production shipments expected in the second half of 2006.
“We also continued to execute against our plans to improve our balance sheet. We had a successful equity offering, reduced debt and lowered our debt-to-capital ratio to 12 percent2
First quarter gross margin increased to a record 58.5 percent, compared to 57.3 percent in the fourth quarter of 2005. The increase was largely due to product mix improvement, higher desktop and mobile ASPs, and manufacturing efficiencies. Operating income was $259 million in the first quarter, up from $64 million in the first quarter of 2005 and down slightly from $268 million in the fourth quarter of 2005.
Solid first quarter sales were driven by ASP improvements from the prior quarter and increasing customer adoption of AMD’s server, mobile and desktop offerings in the commercial segment. Record AMD Opteron processor sales were driven, in particular, by strong demand for dual-core processors for servers and workstations. Shipments of AMD Turion 64™ mobile processors also increased quarter-on-quarter. Geographically, processor sales were especially strong in Greater China, Latin America, Russia and South Asia.
- FORTUNE magazine ranked AMD as a Top 10 “Most Admired Company” for Innovation in 2005 and the leader in the category of innovation among semiconductor companies in 2005.
- The AMD64 platform has earned more than 200 global industry awards. In the first quarter, AMD added 26 awards, including: 2005 Reader’s Choice Award for Best Processor Architecture from Tom’s Hardware for the AMD Athlon™ 64 X2 processor and Best Server Processor of 2005 from In-Stat MDR for the Dual-Core AMD Opteron processor.
- More than 50 percent of the top 500 of the Forbes Global 2000 companies or their subsidiaries use AMD64 processor-based systems. Recent additions include China State Power, Continental AG, Enbridge, Inc., Fiat, Marathon Oil Corporation, Mitsubishi UFJ Financial Group, Mohawk Industries, Inc., New York Times Company and the Philadelphia Stock Exchange, amongst others.
- As planned, Fab 36 commenced shipments of AMD64 processors at the end of March and the fab is already demonstrating mature yields.
- Customers and partners worldwide continue to expand the depth and breadth of their AMD64 commercial product offerings.
- HP, IBM and Sun Microsystems incorporated AMD’s newest AMD Dual-Core Opteron™ processors into their server offerings.
- Lenovo and AMD broadened their global relationship with the worldwide launch of a new line of commercial client PCs from Lenovo. These new AMD64 offerings build on the considerable success AMD and Lenovo have shared in China during the past two years.
- Supermicro Computer, Inc, Tyan Computer Corporation and Uniwide Technologies, Inc. joined AMD’s Validated Server Program (VSP) which ensures solution providers have direct access to qualified, reliable, stable and well-supported AMD64 server solutions.
- The AMD Commercial Systems Channel Program now includes more than 20,000 channel sales and technical representatives worldwide.
- AMD broadened its family of product offerings in the quarter, launching five Dual-Core AMD Opteron processors, two AMD Turion 64 processors, the
AMD Athlon 64 FX-60 dual-core processor, and three AMD Sempron™ processors for mobile and desktop computing.
- AMD’s standards-based and collaborative approach to technology development continued with the release of AMD’s open I/O virtualization technology specification through royalty-free licenses.
AMD’s outlook statements are based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions.
AMD expects second quarter sales to be flat to slightly down seasonally from the first quarter of 2006. If achieved, this would approximate a 65 percent increase from comparable sales in the second quarter of 2005.
AMD will hold a conference call for the financial community at 2:30 p.m. US PDT today to discuss first quarter financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its Web site at www.amd.com
. The webcast will be available for 10 days after the conference call.
Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. Founded in 1969, AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide. For more information visit www.amd.com
This release contains forward-looking statements concerning future periods of 2006, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from the company’s current expectations. Risks include the possibility that global business and economic conditions will worsen, resulting in lower than currently expected sales in the second quarter of 2006; that Intel Corporation’s pricing, marketing programs, product bundling, new product introductions or other activities targeting the company’s microprocessor business will prevent attainment of the company’s current microprocessor sales plans; that demand for computers and, in turn, demand for the company’s microprocessors will be lower than currently expected; that adoption of AMD64 products by OEMs will not continue to occur as expected; that the company may not achieve its current product and technology introduction schedules; that the company will not be able to raise sufficient capital to enable it to establish leading-edge capacity to maintain its market leadership positions; that the company will not be able to obtain sufficient manufacturing capacity or components to meet demand for its products; that solutions providers will not provide the infrastructure to support the company’s AMD64 technology in a timely fashion; and that unfavorable results of operation of Spansion will adversely impact the company’s results of operations.
We urge investors to review in detail the risks and uncertainties in the company’s Securities and Exchange Commission filings, including but not limited to the Annual Report on Form 10-K for the year ended December 25, 2005.
AMD, the AMD Arrow logo, AMD Athlon, AMD Opteron, AMD Sempron, AMD Turion, and combinations thereof are trademarks of Advanced Micro Devices, Inc. Spansion is a trademark of Spansion, Inc. Other names used are for identification purposes only and may be trademarks of their respective owners.
1 As a result of Spansion Inc.’s initial public offering (IPO) in December 2005, comparison of first quarter consolidated financial results to previous periods do not correlate directly. Therefore, all prior quarter comparisons in this release exclude the results of the Memory Products segment.
2 Debt-to-Capital ratio is calculated as follows: Total Debt (Long-term debt and capital lease obligations including current portion) divided by Total Capital (Total Debt plus Minority Interest plus Total Stockholders Equity).