Advanced Micro Devices (AMD)
Q1 2011 Earnings Call
April 21, 2011 5:00 pm ET
Ruth Cotter - Director, Investor Relations
Richard Bergman - Senior Vice President and General Manager of Products Group
Thomas Seifert - Interim Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Senior Vice President
James Covello - Goldman Sachs Group Inc.
David Wong - Wells Fargo Securities, LLC
Cody Acree - Williams Financial Group, Inc.
Glen Yeung - Citigroup Inc
Christopher Danely - JP Morgan Chase & Co
Stacy Rasgon - Sanford C. Bernstein & Co., Inc.
Ross Seymore - Deutsche Bank AG
JoAnne Feeney - Longbow Research LLC
Christopher Caso - Susquehanna Financial Group, LLLP
Vivek Arya - BofA Merrill Lynch
Ambrish Srivastava - BMO Capital Markets U.S.
Timothy Luke - Barclays Capital
John Pitzer - Crédit Suisse AG
Doug Freedman - Gleacher & Company, Inc.
Srini Pajjuri - CLSA Asia-Pacific Markets
Previous Statements by AMD
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Thank you, Huey, and welcome to AMD's first quarter earnings conference call. Participants on today's conference call are Thomas Seifert, our Chief Financial Officer and Interim CEO; and Rick Bergman, Senior Vice President and General Manager of AMD's Product Group. This is a live call and will be replayed via 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 1522169. The telephone replay will be available for the next 10 days starting later this evening.
This is the first quarter AMD is accounting for GLOBALFOUNDRIES under the cost method, and AMD's ownership of GLOBALFOUNDRIES on a fully diluted basis decreased to approximately 12% as of the end of the first quarter. Reconciliation for all non-GAAP financial measures discussed today is included in the financial tables accompanying our earnings release available in the Investor Relations section of amd.com. Written executive commentary, which contains additional information regarding AMD's result is posted on AMD's website at quarterlyearnings.amd.com.
I would also like to highlight a few dates of interest for you. Thomas will present at the JPMorgan Global Technology, Media and Telecom Conference on the 17th of May in Boston. Our second quarter quiet time will begin at the close of business on Friday, June 17. And we will announce our second quarter earnings on Thursday, July 21.
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 expectation.
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 expectations. You'll find detailed discussions about such risk factors in our most recent SEC filing, AMD's annual report on Form 10-K for the quarter ended December 25, 2010.
With that, I'd like to hand the call over to Thomas.
Thank you, Ruth. AMD's performance in the first quarter of 2011 were solid. We launched the first of our revolutionary AMD Fusion APU platforms based on our low-power Brazos processors, and we're pleased to report excellent OEM adoption and sell through to end users. In the first full quarter of availability, roughly half of our notebook shipments were based on Brazos, a product rapidly gaining credit for redefining the user experience in both the Netbook and Thin & Light notebook segment.
We also began shipping Llano for revenue on the first quarter, and it is very simply, the most impressive processor in history, featuring a modern graphics architecture. Llano gives mainstream PC users something they've never had before, a brilliant digital experience coupled with AllDay battery life. It delivers a better end-user experience than anything else on the market and our customers have told us that.
You should expect to see Llano-based systems widely available in this quarter. Beyond its unique performance characteristics, Fusion is also a key part of our overall profitability strategy. We delivered on our top line guidance. We were right on target with our non-GAAP gross margin guidance at 45% and we managed operating expenses carefully. As a result, we delivered solid free cash flow in the period.
In the commercial market, improving performance in our Embedded and Professional Graphics segments was masked by continued softness in our overall Server business. While disappointed with our top line trajectory in the Server business, we've taken a number of steps that we believe should lead to improved results in the second half of the year.
First, we have on-boarded a larger team of experienced customer account engineers who are now engaged with customers. In addition, we are working more closely with our OEMs and ODMs to drive the new AMD-based systems into the hands of key cloud virtualization customers. And finally, we continued on track to ship Bulldozer-based server platforms towards the end of the summer. Our new Bulldozer core delivers substantial improvements in floating-point performance in a platform featuring superior memory utilization and I/O throughput.