AMD 2012 Annual Report Download - page 57

Download and view the complete annual report

Please find page 57 of the 2012 AMD annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

Computing Solutions operating loss was $231 million in 2012 compared to operating income of $556
million in 2011. The decline in operating results was primarily due to the decrease in revenue referenced above,
partially offset by a $136 million decrease in marketing, general and administrative expenses, a $45 million
decrease in research and development expenses and a $29 million decrease in cost of sales. Cost of sales
decreased primarily due to lower unit shipments, partially offset by the $273 million LCM charge related to the
fee for GF’s waiver of a portion of our obligations and an inventory write-down of $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”. Marketing, general and administrative expenses and research and
development expenses decreased for the reasons set forth under “Expenses,” below.
Computing Solutions operating income was $556 million in 2011 compared to $529 million in 2010. The
improvement in operating results was primarily due to the increase in net revenue referenced above, partially
offset by a $70 million increase in cost of sales, a $45 million increase in research and development expenses and
a $42 million increase in marketing, general and administrative expenses. Cost of sales increased primarily due to
higher microprocessor and chipsets unit shipments and the absence of a one-time benefit related to the
deconsolidation of GF in 2010. Research and development expenses and marketing, general and administrative
expenses increased for the reasons set forth under “Expenses,” below.
Graphics
Graphics net revenue of $1.4 billion in 2012 decreased by 9% compared to net revenue of $1.6 billion in
2011. The decrease was primarily due to a 16% decrease in net revenue from sales of GPU products, partially
offset by an increase in net revenue received in connection with the development and sale of game console
systems that incorporate our graphics technology. Net revenue from sales of GPU products decreased due to
lower unit shipments, partially offset by increased average selling price. GPU unit shipments decreased due to
challenging market conditions. GPU average selling price increased primarily due to improved product mix.
Graphics net revenue of $1.6 billion in 2011 decreased by 6% compared to net revenue of $1.7 billion in
2010. The decrease was due primarily to a 6% decrease in net revenue from sales of GPU products. Net revenue
from sales of GPU products decreased primarily due to a decrease in both GPU unit shipments and average
selling price. The decrease in GPU unit shipments was primarily due to lower customer demand, which we
believe was due in part to the disruption in the supply of hard disk drives caused by the flooding in Thailand at
the beginning of 2011. GPU average selling price decreased due to a shift in our product mix to lower-end GPU
products.
Graphics operating income was $105 million in 2012 compared to $51 million in 2011. The improvement in
operating results was primarily due to a $101 million decrease in cost of sales, a $60 million decrease in research
and development expenses and a $41 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
GPU shipments and correspondingly lower manufacturing costs. Marketing, general and administrative expenses
and research and development expenses decreased for the reasons set forth under “Expenses” below.
Graphics operating income was $51 million in 2011 compared to $149 million in 2010. The decline in
operating results was primarily due to the decrease in net revenue referenced above and a $20 million increase in
marketing, general and administrative expenses, partially offset by a $25 million decrease in cost of sales.
Marketing, general and administrative expenses increased for the reasons set forth under “Expenses,” below.
Cost of sales decreased primarily due to lower GPU shipments and correspondingly lower manufacturing costs.
All Other
All Other revenue was immaterial in 2012 and 2011 and $14 million in 2010. All Other revenue declined
because as of 2009, we no longer developed new Handheld products. We decided to exit the Handheld business
after selling certain graphics and multimedia technology assets and intellectual property to Qualcomm in the first
quarter of 2009.
49