Nearing the end of the cycle for their current generation products, its not surprising to see poor financial results come out from AMD. Last year was a terrible one and it looks like 2016 won’t be much better, at least for Q1. For the first quarter of 2016, AMD posted a net loss of $109 million from an operating revenue of $832 million. Unsurprisingly, it is better than 2015 as that year was arguably the worst ever.
AMD blames the revenue drop of 13% sequentially and 19% year-over-year as lower semi-custom sales. This is somewhat expected as we continue the PS4 and Xbox One lifecycle. The bright side is that Sony is set to release the PlayStation 4 Neo and even the Xbox One will see new revisions if not a full upgrade. Combined with the Nintendo NX, those should bounce back the semi-custom segment as consumers buy more consoles again.
Even though margins improved slightly to 32% (Intel posts around 60%), the increase in expenses led to the loss. This is reportedly due to increased R&D for upcoming products, which in my mind are due to Vega/Navi and Zen+ since Zen and Polaris are all set in stone by now. With Polaris 10 and Zen coming this year and even an Apple deal in the works, AMD has a good chance to turn things around as long as they can execute and head back to the black.