AMD 2014 Annual Report Download - page 53

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Computing and Graphics net revenue of $3.7 billion in 2013 decreased by 21% compared to $4.7 billion in
2012 as a result of a 23% decrease in unit shipments and a 2% increase in average selling price. The decrease in
unit shipments was primarily attributable to lower unit shipments of our microprocessor products for desktop and
notebook PCs, chipset products and GPU products. The increase in average selling price was primarily
attributable to an increase in average selling price of our GPU products, partially offset by a decrease in average
selling price of our microprocessor products for desktop and notebook PCs and chipset products. Unit shipments
and average selling price for microprocessor products for desktop and notebook PCs and chipset products
decreased primarily due to challenging market conditions and the increasing popularity of tablets as a consumer
device of choice, which resulted in decreased demand for our products.
Computing and Graphics operating loss was $76 million in 2014 compared to an operating loss of $101
million in 2013. The improvement in operating results was primarily due to a $323 million decrease in cost of
sales, a $201 million decrease in research and development expenses and a $89 million decrease in marketing,
general and administrative expenses, partially offset by the decrease in net revenue referenced above. Cost of
sales decreased primarily due to lower unit shipments in 2014 compared to 2013. Operating loss in 2014 included
a $19 million benefit from technology licensing revenue. In addition, operating loss in 2013 included a $57
million benefit from sales of inventory that had been previously reserved in the third quarter of 2012, as
compared to a similar $8 million benefit in 2014. Research and development expenses and marketing, general
and administrative expenses decreased for the reasons set forth under “Expenses,” below.
Computing and Graphics operating loss was $101 million in 2013 compared to an operating income of $129
million in 2012. The decline in operating results was primarily due to the decrease in net revenue referenced
above, partially offset by a $582 million decrease in cost of sales, a $154 million decrease in marketing, general
and administrative expenses and a $37 million decrease in research and development expenses. Cost of sales
decreased primarily due to lower unit shipments in 2013 compared to 2012 as well as the absence of the
inventory write-down of approximately $100 million during the third quarter of 2012 as a result of lower than
anticipated future demand for certain products, mainly first generation A-Series APU products, codenamed
“Llano”. In addition, operating loss for 2013 included a $57 million benefit from sales of inventory that had been
previously reserved in the third quarter of 2012. Marketing, general and administrative expenses and research
and development expenses decreased for the reasons set forth under “Expenses,” below.
Enterprise, Embedded and Semi-Custom
Enterprise, Embedded and Semi-Custom net revenue of $2.4 billion in 2014 increased by 51% compared to
net revenue of $1.6 billion in 2013. The increase was primarily due to an increase in net revenue received in
connection with higher unit shipments of our semi-custom SoC products, which we began shipping in the second
quarter of 2013.
Enterprise, Embedded and Semi-Custom net revenue of $1.6 billion in 2013 increased by 126% compared to
net revenue of $0.7 billion in 2012. The increase was primarily due to net revenue received in connection with
sales of our semi-custom SoC products, which we began shipping in the second quarter of 2013, partially offset
by a decrease in net revenue from server products. Net revenue from sales of server products decreased in 2013
compared to 2012 due to lower unit shipments, as well as lower average selling price due to challenging market
conditions, which adversely impacted demand.
Enterprise, Embedded and Semi-Custom operating income was $399 million in 2014 compared to $295
million in 2013. The improvement in operating results was primarily due to the increase in net revenue
referenced above, partially offset by a $614 million increase in cost of sales, a $64 million increase in research
and development expenses and a $15 million increase in marketing, general and administrative expenses. The
increase in cost of sales was primarily due to an increase in unit shipments of our semi-custom SoC products in
2014 compared to 2013. In addition, operating income in 2014 included an $8 million benefit from technology
license revenue. Research and development expenses and marketing, general and administrative expenses
increased for the reasons set forth under “Expenses” below.
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