AMD is still losing money, but its losses have narrowed as the company posts a solid quarter. Can this new found confidence create a profitable organization?

AMD headquarters flag2 AMDs latest quarterly report shows a reversal in fortune

AMD thinks it can return to profitability by September 30 of this year.

For a company that was once facing quarterly losses to the tune of $473 million in Q4 2012, the potential for a return to profitability is an enormous boost. Every quarter since that fateful quarter the company’s losses have narrowed: in Q1 2013 the company lost $98 million and this quarter the company posted a loss of $29 million.

This quarter’s loss was posted on revenue of $1.16 billion, a drop from the $1.41 billion posted during the same quarter last year.

AMD’s Computing Solutions division, the segment of the company responsible for shipping processors, turned a profit this quarter. While the division’s revenue dropped to $841 million this quarter, it still did manage to make $2 million (it lost $39 million last quarter) in profit based on higher notebook, desktop, and server shipments .

The company’s Graphics and Visual Solutions segment reported that it broke even with $16 million in operating income.

AMD said it expects revenue to grow by to grow 22 percent over the next quarter to push it to profitability. Of this 22 percent growth in revenue, 20 percent is is expected to come from the launch of the new Xbox and Playstation both of which contain AMD silicon. AMD’s CEO Rory Read admitted on a conference call with investors that this spike in revenue from the launch of the next generation of game consoles will only be temporary as AMD shifts from selling the console manufacturers chips to licensing them IP.

How AMD got to where it is today

In the light of bad news from other silicon companies, the fact that AMD can say that they see light at the end of the tunnel is impressive. AMD got to where it is right now through a series of strategic wins during 2012-2013 that might only have marginal payoffs not, but are going to impact the next generation of computing.

The first, and most prominent, is the inclusion of AMD IP on the Playstation 4 and the Xbox One. Game developers will be writing their code for use on AMD hardware, and when porting it over to the PC it will work better on a Radeon card instead of a GeForce.

But that’s the given and obvious one. The bigger win that I find more interesting is how AMD has effectively blocked out CUDA from the desktop media production market. As I wrote shortly after WWDC, Apple’s new Mac Pro ships with a pair of AMD Firepro GPUs — that play with team OpenCL instead of team CUDA. Considering that Mac is the go-to platform for multimedia production, the next-generation of multimedia production apps are going to be OpenCL and not CUDA optimized. This doesn’t mean the Quadro is going to go away anytime soon, but it won’t be as relevant as it once was.

AMD’s stock is up 94% this year and closed the Thursday trading day at $4.94, up nearly 6%.

Source: AMD