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AMD Revenue gets a Much-Needed Boost from Next-Gen Console Sales

Fahad Arif
Posted Apr 18, 2014
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Sony and Microsoft’s respective PlayStation 4 and Xbox One video game consoles have been brought to life by the manufacturers by putting together small different pieces of very powerful hardware. Both the consoles rock top quality hardware including RAM, CPU and GPU. The central and graphics processing units of the next-gen consoles are specially made and customized by AMD.

Next-Gen Console Sales and Demand for Radeon Graphic Cards Boosted AMD Earnings

Advanced Micro Devices, abbreviated and most commonly known as AMD, is a veteran American multinational semiconductor company that manufactures computer related technologies and chips. Two most important components i.e. GPU and CPU of the next-gen video game consoles have also basically been developed by AMD, customized specially to fit each console.

Despite being one of the leading central and graphics processing units developer, AMD’s financial conditions over past few years have not been smashing. Other companies such as NVIDIA prove to be a durable competitor to AMD. One thing that makes AMD more notable over other computer chips manufacturers is that it powers PlayStation 4 and Xbox One, and certainly this is why the company’s earnings have improved quite well.

According to a report published by PCWorld, AMD outstripped revenue expectations set for the first quarter of 2014. The abrupt sales of PlayStation 4 and Xbox One lifted the company’s revenues by 28 percent. However, even after the much-needed boost in the earnings, the chip maker also reported a considerable loss.

For the first quarter earnings, AMD reportedly took a loss of $20 million on revenue of $1.4 billion. Comparatively, AMD still saved a lot this time as the loss for same period a year ago was $146 million on revenue of $1.09 billion. The given numbers also include $200 million “take or pay” transactions made between AMD and the foundry, know as Globalfoundires, that manufactures its chips.

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Yahoo Finance’s analysts poll predicted that the chip maker company would not report its profit or loss. Major decline is reported in AMD’s Computing Solutions segment, the 12 percent decline has eventually resulted in $663 million downfall. People’s growing lack of interest in traditional PCs and sole CPUs muffled the chip manufacturer sales resulting in $3 million unit operating loss.

On the brighter side, the American chip maker pushed the progress to 118 percent in the recent years. All three eighth generation video game consoles, namely, PlayStation 4, Xbox One and Wii U rock AMD’s chips and the fact that demand for all these consoles is rapidly increasing has favoured AMD by generating $91 million in unit’s operating income.

In addition, AMD also reported that there is a fast growing “strong demand” for its newly released graphics chips known as Radeon R7 and R9. Explaining how the company is planning further increase in the revenue and profits growth, AMD’s president and chief executive, Rory Read, said:

“AMD continued our momentum by building on the solid foundation we set in the second half of 2013, further transforming the company. Backed by our powerful x86 processor cores and hands-down best graphics experiences, we achieved 28 percent revenue growth from the year-ago quarter. We are well positioned to continue to grow profitably as we diversify our business and enable our customers to drive change and win.”

AMD also reported that the current debt of the company is calculated to be $2.14 billion, while the company’s cash and short-term investments are known to be $982 million. The company earlier set a target of taking the total cash to $1 billion. AMD expects that the revenue will either hopefully increase to 3 percent in the second quarter of 2014 or it will remain unchanged.

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