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Chip Makers AMD, NVIDIA Recovering

Posted on Tuesday, May 12th 2009

According to recent report published by research firm IDC, the PC microprocessor market was weak in Q109 but that the decline is slowing due to inventory replenishment by OEMs at the end of the quarter. The report further noted market share gains for AMD. NVIDIA also reported market share gains. Let’s take a closer look at their performances this quarter.

Advanced Micro Devices Inc. (NYSE:AMD), a leading microprocessor supplier with annual revenue of $5.8 billion, reported Q1 results last month, beating analyst estimates. Revenue was down 21% to $1.177 billion but well above analyst estimates of $977.8 million. Net loss was $416 million or $0.66 per share versus net loss of $351 million last year. Though net loss was in line with estimates, it was the tenth straight quarterly loss.

Gross margin was 40% versus 23% last quarter. The cash and marketable securities balance at the end of the quarter was $1.6 billion. Long-term debt outstanding was $3.7 billion after ADM transferred approximately $1 billion of debt to its chipmaking arm, Globalfoundries, which was launched in the quarter.

By segment, Computing Solutions revenue was $938 million, up 7% q-o-q but down 21% y-o-y. ASPs were down q-o-q and operating loss was $36 million. In the Graphics segment, revenue was $222 million, down 15% y-o-y and 18% q-o-q. ASPs were up y-o-y and the segment broke even at the operating level.

In the quarter AMD unveiled the “Yukon” platform for ultrathin notebook PCs, which debuted in the award-winning HP Pavilion dv2 notebook.

For the second quarter, AMD expects revenue to decline to $1.3 billion, while Intel expects Q2 revenue to be flat. The stock is currently trading around $4 with a market cap of about $3 billion. It hit a 52-week high of $4.39 on May 5.

Chart for Advanced Micro Devices Inc. (AMD)

The IDC report also said that Intel’s market share was 77.3%, down 4.7%, while AMD’s market share stood at 22.3%, a gain of 4.6%. NVIDIA grew share in the desktop standalone GPU segment from 63% last quarter to 69% in Q109.

After a dismal fourth quarter, NVIDIA Corporation (NASDAQ:NVDA) the leading graphics chipmaker with annual revenue of $3.4 billion, bounced back last week with strong first quarter results that beat estimates. Revenue was down 42% to $664 million, but grew 38% sequentially. Net loss was $201.3 million, or $0.37 per share, versus a profit of $176.8 million, or $0.30 per share last year. Adjusted loss was $0.09 per share while analysts expected loss of $0.10 per share on revenue of $534.4 million.

By segment, revenue from the GPU business grew 44% q-o-q, driven by 50% q-o-q growth in Desktop and 28% q-o-q growth in Notebook segments. The Professional Services business was flat and the MCP business was up 94% q-o-q.

GAAP gross margin for the first quarter was 28.6% with the profitable PSB segment reporting a flat quarter. At the end of the quarter, cash and cash equivalents and marketable securities were approximately $1.34 billion, up approximately $83 million sequentially.

For the second quarter of fiscal 2010, NVIDIA expects revenue to be up 5% sequentially. Gross margin is expected in the range of 32% to 34%. The stock is currently trading around $9 with market cap of about $5 billion. It hit a 52-week high of $12.39 on May 4.

Chart for NVIDIA Corporation (NVDA)

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I actually was looking a while back at AMDs performance. It seems to be a very cyclical stock. I guess, the whole semiconductor industry is roughly cyclical. But, AMD specially seems to be doing that every couple of years. It tries to catch up with Intel and builds some momentum. But then, Intel destroys the margins completely and because of the sheer volume, AMD goes back to the dungeon…and goes through a lot of bad quarters etc..

Thanks for sharing this wonderful post!

Mehul Jain Saturday, May 16, 2009 at 1:59 PM PT