Advanced Micro Devices, Inc. (AMD)

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Advanced Micro Devices Inc. (AMD)

Q2 2010 Earnings Conference Call

July 15, 2010 05:00 pm ET

Executives

Dirk Meyer - President and Chief Executive Officer

Thomas Seifert - SVP & CFO

Analysts

Tim Luke - Barclays Capital

Doug Freedman - Gleacher & Company

David Wong - Wells Fargo Security

Glen Yeung - Citigroup

Uchi Orji - UBS

Ross Seymore - Deutsche Bank

John Pitzer - Credit Suisse Securities (USA) LLC

Shawn Webster - Macquarie

Kate Kotlarsky - Goldman Sachs

Christopher Danely - JPMorgan

Patrick Wang - Wedbush Securities

Srini Pajjuri - CLSA

Krishna Shankar - ThinkEquity LLC

Hans Mosesmann - Raymond James

Frank Jarman - Goldman Sachs

Presentation

Operator

Thank you and welcome to AMD's second quarter earnings conference call. Our participants today are Dirk Meyer, our President and CEO and Thomas Seifert, our Chief Financial Officer. This is a live call and will be replayed by our webcast on amd.com. There will also be a telephone replay; the number is 888-266-2081. Outside of the United States, the number is 703-925-2533. The access code for both is 1465123. The telephone replay will be available for the next ten days, starting later this evening.

Before we start, I’d like to highlight that AMD will attend the Citi Technology Conference on September 7th in New York. And also AMD will host its Financial Analyst Day on November 9th at the company’s headquarters in Sunnyvale, California and not November 11th, as previously communicated. Lastly, our third quarter quiet time will begin at the close of business on Friday, September the 10th.

Last January, we announced that we deconsolidated GLOBALFOUNDRIES as of the first quarter of 2010 and began accounting for ownership interest under the equity method of accounting. AMD has an ownership stake in GLOBALFOUNDRIES, which is reflected in the equity and net loss of investee line on our statement of operations. AMD's class A preferred share ownership of GLOBALFOUNDRIES decreased from approximately 82% to approximately 79% as a result of additional capital calls that took place in the second quarter.

ATEC participated in the cash calls and AMD did not. As a result, AMD's ownership on a fully diluted basis also decreased to approximately 28%.

Reconciliation of all non-GAAP financial measures disclosed today are included in the financial tables that accompany our earnings press release, which are also available in the Investor Relations section of amd.com.

Before we begin today’s call, I’d like to caution everyone that we will be making forward looking statements about management’s expectations. Investors are cautioned that those statements are based on current beliefs, assumptions and expectations, speak only as of the current date, and involve risks and uncertainties that could cause actual results to differ materially from our current expectations.

The semiconductor industry is generally volatile, and market conditions are particularly difficult to forecast, especially in light of the current state of the economy. We encourage you to review our filings with the SEC where we discuss the risk factors that could cause actual results to differ materially from our expectations. You’ll find detailed discussions of such risk factors in our most recent SEC filing, AMD’s quarterly report on Form 10-Q for the quarter ended March 27th, 2010. Now with that I would like to hand the call over to Dirk.

Dirk Meyer

Thank you Ruth, and in an environment of healthy demand for IT products, AMD delivered another solid quarter of revenue growth and operating performance. Our second quarter results demonstrate that we can generate profits while continuing to transform the business to achieve our short and long-term goals. Demand for our GPU offerings in the quarter was very strong, and shipments were tempered only by supply constraints. This was the second straight quarter of record GPU shipments, led by an 18% sequential increase in Notebook Discrete units. More than half of our GPU shipments in the quarter were DX11 capable, and we have shipped nearly 16 million DX11 GPUs to date.

In the second half of the year, we expect GPU demand to remain healthy and supply constraints to ease. We remain on track to bolster our GPU leadership with the introduction of our second generation DX11 graphics products, later this year. We completed the rollout of our high-low server products. We are targeting power and value conscious markets with the new Opteron 4000 series we introduced late in June. The Opteron 4100 series processor is the world’s lowest power, per core server processor and the first CPU design specifically for cloud datacenters.

We are targeting performance oriented markets with our Opteron 6000 series. Shipments of our 6000 series nearly quadrupled sequentially, ramping late in the quarter as our largest customers transitioned the bulk of their AMD based offerings to the new platform. We expect to see the substantial impact of our new generation sever products to fully materialize in the third quarter.

Turning to our client DC business. Customer response to our newest AMD VISION client offerings is outstanding. We more than tripled the number of VISION branded platforms in the market compared to just nine months ago. The launch of our latest VISION offerings was the most successful platform introduction in our history, driving record mobile CPU unit shipments for the quarter.

We secured more than 130 design wins, spanning multiple price points across both the consumer and commercial markets. Customer adoption of our (inaudible), the mainstream notebook platform in higher priced bands is a testament to the competitiveness of our platform offerings. The broad assortment of VISION offerings positions us well for the key back-to-school and holiday buying cycles.

We are very pleased that Sony is now offering notebooks based on AMD CPUs as part of its vision enabled VAIO notebooks. And we welcome Sony back to the ranks of AMD CPU customers.

Read the rest of this transcript for free on seekingalpha.com