AMD today announced revenue for the third quarter of 2013 of $1.46 billion, operating income of $95 million and net income of $48 million, or $0.06 per share. The income greatly exceeded Wall Street's estimates for the company, which generally came in at $0.02 per share. The quarter marks the company's return to profitability after a series of unexpectedly bad results.
“AMD returned to profitability and generated free cash flow in the third quarter as we continued to successfully execute the strategic transformation plan we outlined a year ago,” said Rory Read, AMD president and CEO. “We achieved 26 percent sequential revenue growth driven by our semi-custom business and remain committed to generating approximately 50 percent of revenue from high-growth markets over the next two years. Developing industry-leading technology remains at our core, and we are in the middle of a multi-year journey to redefine AMD as a leader across a more diverse set of growth markets.”
The company reported a decrease in gross margin to 36 percent. Cash, cash equivalents and marketable securities balance, including long-term marketable securities, was $1.2 billion at the end of the quarter, slightly above AMD's desired $1.1 billion equilibrium point.
The recovery was led by the Graphics and Visual Solutions (GVS) is comprised of graphics processing units (GPUs), including professional graphics, as well as semi-custom products and development and game console royalties. GVS segment revenue increased 110 percent sequentially and increased 96 percent year-over-year driven largely by our semi-custom business.
AMD's CPU business isn't faring as well. Computing Solutions segment revenue decreased 6 percent sequentially and decreased 15 percent year-over-year. The sequential and year-over-year declines were due to decreased notebook and chipset unit shipments, partially offset by an increase in desktop unit shipments.
For the fourth quarter of 2013, AMD expects revenue to increase five percent, plus or minus three percent, sequentially. Leading the growth will be payments from Microsoft and Sony for its custom chipsets being used in the XBox One and PlayStation 4. Additionally, AMD has recently started shipments of the AMD Radeon R7 and R9 Series graphics cards, which should assist quarterly earnings as well.