AMD reported better-than-expected fourth quarter financials thanks to increased sales in its computing and graphics segment. However, its current quarter outlook and cautionary statement sent shares down after hours.
The semiconductor maker posted net income of $61 million, or 6 cents per share.
Non-GAAP earnings were 8 cents per share on revenue of $1.48 billion, up 34 percent year-over-year.
Wall Street was expecting AMD to post earnings of 5 cents per share on revenue of $1.41 billion.
For the full year, AMD reported revenue of $5.33 billion and net income of $43 million or 4 cents per share. AMD saw a 60 percent year-over-year increase in computing and graphics sales.
"2017 marked a key inflection point for AMD as we re-shaped our product portfolio, delivered 25 percent annual revenue growth, expanded gross margin and achieved full-year profitability," said Dr. Lisa Su, AMD president and CEO. "We are even more excited about 2018 as we launch our next wave of high-performance products and continue to position AMD as one of the premier long-term growth companies in the technology industry."
Here's a closer breakdown of the company's performance, by department:
- Computing and graphics: Segment revenue increased 60 percent year-over-year to $958 million. AMD says the increase was driven by strong sales of Radeon graphics and Ryzen desktop processors.
- Enterprise, embedded and semi-custom: Segment revenue increased 3 percent year-over-year to $522 million driven by server revenue. Sequentially, revenue decreased 37 percent driven by seasonally lower semi-custom SoC revenue, AMD said.
For the current quarter, AMD estimates revenue to be approximately $1.55 billion, plus or minus $50 million, an increase of 32 percent year-over-year.
"The current quarter was driven by strength in Ryzen and Radeon Graphics and things seem to be clicking into gear as you would expect from the product value proposition," analyst Patrick Moorhead of Moor Insights & Strategy, said. "Computing and graphics was up an eye popping 60%. It normally takes three quarters for anything in the datacenter to kick in and we are seeing evidence of Epyc and datacenter graphics hitting, all goodness for AMD. I expect AMD to do even better in 2018 as Ryzen mobile and Ryzen with integrated graphics will be readily available. Epyc and datacenter Radeon graphics will have yet another month to bake and I'm expecting some bigger results here next quarter."
As a result of US tax reform, AMD said it received a $18 million tax credit.
In its earnings report, AMD issued a cautionary statement that its business could be adversely impacted by factors outside its control, including the Meltdown and Spectre flaws:
AMD's efforts to prevent and address security vulnerabilities can be costly and may be partially effective or not successful at all. For instance, AMD's mitigation efforts, including the deployment of software or firmware updates to address security vulnerabilities, could result in unintended consequences such as adverse performance system operation issues and reboots. AMD may also depend on third parties, such as customers, vendors and end users to deploy AMD's mitigations or create their own, and they may delay, decline or modify the implementation of such mitigations. AMD's relationships with its customers could be adversely affected as some of its customers may stop purchasing AMD products, reduce or delay future purchases of AMD products, or use competing products. Any of these actions by AMD's customers could adversely affect its revenue. AMD is also subject to claims related to the recently disclosed side-channel exploits, such as "Spectre" and "Meltdown," and may face claims or litigation for future vulnerabilities. Actual or perceived security vulnerabilities of AMD products may subject AMD to adverse publicity, damage to its brand and reputation, and could materially harm AMD's business or financial results.
For fiscal 2018, AMD will adopt a new revenue recognition standard, but expects the impact on revenue to be immaterial.
AMD's shares were down more than 6 percent in after-market trading.