AMD 2013 Annual Report Download - page 3

Dear Stockholders:
In 2013, we made significant progress in bringing AMD closer to our mission of
becoming the world’s leading designer and integrator of innovative, tailored technology
solutions that empower people to push the boundaries of what is possible. Throughout
the year, we achieved many goals the Company set going into 2013 despite broader
PC industry challenges.
Transformation and Progress: Profitability and Acceleration of Our Business
Our strategic three-phase plan to transform AMD began with resetting and
restructuring our business to lay the foundation for the acceleration of our growth. By
the end of 2013, we successfully implemented phase one and phase two of our
turnaround plan to create a more efficient and sustainable business model in the
following ways:
• Reducing our operating expenses more than 30 percent from the first quarter of 2012 to the fourth quarter of
2013.
• Generating more than 30 percent of our net revenues in the second half of 2013 from our semi-custom and
embedded businesses, both high-growth focus areas for AMD.
• Exiting the year with cash balances, including marketable securities, of $1.2 billion, above our optimal cash
balance target of $1.1 billion, and establishing an incremental secured revolving line of credit up to $500 million.
• Returning to profitability and free cash flow in the second half of the year.
I’m very pleased to report that AMD has also made steady progress on phase three of our plan: to transform our
business into a high-growth market competitor. Our business transformation is being propelled by an increasingly
diversified product portfolio and a focus on driving to 50 percent of AMD revenue from five high-growth markets by the
end of 2015: semi-custom solutions, ultra-low power client PC, embedded, dense server, and professional graphics. We
will measure our success in 2014 and beyond as follows:
• Increasing profitability.
• Further expanding our portfolio of differentiated and reusable IP, and leveraging our IP across a broader set of
products.
• Generating preference for the AMD brand and our products globally, spring-boarding off the comprehensive
brand revitalization work we executed this year.
• Retaining the industry’s best top talent and capabilities.
As we drive results externally, I’m proud to report that motivation and morale is very high internally, as well. In fact, AMD
employees are among the most engaged and optimistic in the industry. Even in the face of difficult cost-cutting and
restructuring actions, our 2013 annual employee satisfaction survey yielded our highest levels of employee engagement
and confidence in leadership that we’ve seen in more than five years because our people believe in and are committed
to our transformation plan.
Solid Foundation for Growth: Unique, World-Class Strengths are Setting AMD Apart
As we continue to successfully achieve the milestones we’ve set along our transformation journey, it’s exciting to see the
industry taking notice of our progress. AMD is being recognized as an innovation powerhouse with a highly-prized IP
portfolio that uniquely positions our business to meet the needs of customers across a variety of growth markets. Our IP
prowess and capabilities as a world-class System-on-Chip (SoC) designer were perhaps most evident in 2013 in the
gaming space, with tailored AMD solutions powering the world’s newest gaming and entertainment consoles from
Microsoft and Sony, who chose AMD because of our ability to meet each of their exacting standards for these most
critical products. More than seven million Sony Playstation®4 and Microsoft®Xbox One™ units were shipped globally in
less than two months following their respective launches, and AMD executed flawlessly to ensure these customers were
able to meet the incredible worldwide demand they experienced.
As a part of AMD’s push into embedded markets, we also extended our product portfolio with the world’s first quad-core
x86 SoC, the new low-power AMD Embedded G-Series SoC for fanless designs at approximately 3-watts average power.1
The G-Series SoC has received numerous industry awards, and wide-ranging adoption by industry-leading companies like
GE Intelligent Platforms and Fujitsu, which helped our embedded business achieve record revenue in 2013. We also
detailed our plans to become the first company to offer both 64-bit ARM®and x86 embedded solutions in 2014.
Our semi-custom and embedded products enabled us to exceed the goal we set for those businesses to generate over
30 percent of AMD’s net revenue by the third and fourth quarters of 2013.
We are also making strides in other growth markets we’ve targeted. Our professional graphics business set a record for
full-year revenue in 2013. Apple’s new Mac Pro desktop with dual AMD FirePro™ graphics processing units (GPUs) is a
perfect example of our momentum in this margin-accretive market. HP’s new thin and light HP ZBook 14 mobile
workstations also rely on AMD FirePro™ professional graphics. We believe we can drive additional growth in the
professional graphics market as we further strengthen our product offerings, expand our work with key software
developers, and secure more design wins.