FINANCIAL MANAGEMENT: FINAL PROJECT
AMD Advanced Micro Devices
Presented By:
Tio Bennett
Introduction
AMD – Advanced Micro Devices
With AMD facing a potential bankruptcy in October of 2014, previous Vice President, Lisa Su, became the CEO of the organization for a historic recovery.
Leading Global Innovation – worldwide leader in high performance graphics and compute technology.
Record breaking growth – over 2000% stock gain (2015-Current)
Stocks - 52-Week High: $58.90 | 52-Week Low: $22.82
Current Net Worth – $6.73B Company
Today’s Market Cap: $52.78 billion
AMD’s outstanding shares were, 1.120B as of Dec. 31st, 2019.
Headquarters is located in Santa Clara, CA
Founded on May 1st, 2069 in Sunnyvale, CA by Jerry Sanders, Jack Gifford, John Carey, Larry Stenger, Frank Botte, Edwin Turney, Sven Simonsen and Jim Giles.
Currently employs about 11,400 employees as of 2019
Invest in AMD
Innovations
Creators of the world’s 1st 7nm microprocessors. In both computing and graphics technologies.
World leader in high performance processors, surpassing sales of their main competitor, Intel.
Bringing enterprise level quality performance to the consumer market
Demand
High performance mobile processors with on-board graphics on high demand by many mainstream PC manufacturers, such as Lenovo, Asus, and Acer.
AMD’s “Zen” Core architecture, leads the market of top rated performance for gamers and content creators.
AMD – Current Events
2018
Press Release of the World’s first 7nm GPUs, to be featured in the next era of AI, High Performance Computing and Cloud Computing.
AMD is introduced into the Supercomputer industry with their new High Frequency AMD EPYC™ Processors. Leading for Discovery and Accelerating Innovation
2019
Professional level graphics performance introduced with AMD’s new 7nm discrete mobile GPUs in the new Apple MacBook Pro.
AMD Wins the “Best-in-Class” Performance aware from Supercomputers to HPC in the Cloud at SC19
2020
Next generation of AMD EPYC™ processors for high performance workstation, database, and commercial HPC
Competition & Environment
AMD’s Primary Competitor: Intel
In a computing environment, AMD’s competition would be Intel on the CPU market and NVidia in the GPU market.
The environment in both are within a race of dollar to performance ratios and frequency computing power.
AMD combats their competitors with leading innovation by being the first to implement and expand the new 7nm processors.
The environment is favorable as technology advances, virtual reality and AI being examples.
Profitability
Income Statement
| AMD, Income Statement (USD $ in Millions) | Year Ending Dec 2019 (Update) | Year Ending Dec 2018 (Update) | Year Ending Dec 2017 (Restated) | Year Ending Dec 2016 (Update) |
| Net Sales | 6,731.00 | 6,475.00 | 5,253.00 | 4,272.00 |
| Revenue | 6,731.00 | 6,475.00 | 5,253.00 | 4,272.00 |
| Total Revenue | 6,731.00 | 6,475.00 | 5,253.00 | 4,272.00 |
| Cost of Revenue | -3,863.00 | -4,028.00 | -3,466.00 | 3,274.00 |
| Cost of Revenue, Total | -3,863.00 | -4,028.00 | -3,466.00 | 3,274.00 |
| Gross Profit | 2,868.00 | 2,447.00 | 1,787.00 | -998 |
| Selling/General/Administrative Expense | 471 | 344 | 322 | 294 |
| Labor & Related Expense | 62 | 42 | 38 | 35 |
| Advertising Expense | 217 | 176 | 156 | 131 |
| Selling/General/Administrative Expenses, Total | 750 | 562 | 516 | 460 |
| Research & Development | 1,547.00 | 1,434.00 | 1,196.00 | 1,008.00 |
| Restructuring Charge | -- | 0 | 0 | -10 |
| Other Unusual Expense (Income) | 116 | 12 | -40 | -20 |
| Unusual Expense (Income) | 116 | 12 | -40 | -30 |
| Total Operating Expense | 6,276.00 | 6,036.00 | 5,138.00 | 4,712.00 |
| Operating Income | 455 | 439 | 115 | -440 |
| Interest Expense - Non-Operating | -94 | -121 | -126 | -156 |
| Interest Expense, Net Non-Operating | -94 | -121 | -126 | -156 |
| Interest Income, Non-Operating | 15 | 18 | 6 | -- |
| Investment Income, Non-Operating | -1 | -3 | -3 | 3 |
| Interest/Investment Income, Non-Operating | 14 | 15 | 3 | 3 |
| Interest Income (Expense), Net-Non-Operating, Total | -80 | -106 | -123 | -153 |
| Other Non-Operating Income (Expense) | -3 | -3 | 0 | 145 |
| Other, Net | -3 | -3 | 0 | 145 |
| Net Income Before Taxes | 372 | 330 | -8 | -448 |
Growth
AMD’s growth is a result of the initiation and innovation to become a high-performance leader.
The introduction to AMD’s product line of Ryzen and new Radeon products were quickly adopted by the industry.
Increasing manufacture output and fulfilling the supply and demand of the market, AMD saw drastic double digit percentage increases year by year over a 4 year span.
Strong demands beginning in 2016 for computing and graphics drew in large growths.
REVENUE
$ Millions
Leadership Products Drive Revenue Growth
2016 2017 2018 2019 4.3 5.3 6.5 6.7
Premium Products Drive Margin Expansion
2016 2017 2018 2019 0.23 0.34 0.38 0.43
Operating Margin
Solid Growth Wit h OpEx Investments
[VALUE] 2016 2017 2018 2019 -0.09 0.02 7.0000000000000007E-2 0.09 NET INCOME $ Millions Significant Growth In Profitability 2016 2017 2018 2019 -498 -33 337 341
AMD & Intel Processor Sales Sales figures from one of the largest retailers of computer parts
AMD dominated the market over its top competitor, Intel.
AMD introducing their back to back new generation lineups of processors
~
Very competitively priced, further highlighting their high-performance per dollar lead
~
AMD Ryzen 3000 Series was a major improvement from previous generations, and the expected 4000 Series set to release in 2020, we should expect the same result
Cash Flow & Liquidity
Cash Flow & Liquidity
| Cash Flow ($ in In millions of USD except for per share items) | Year Ending Dec 2019 (Update) | Year Ending Dec 2018 (Update) | Year Ending Dec 2017 (Restated) | Year Ending Dec 2016 (Update) |
| Net Income/Starting Line | 341 | 337 | -33 | -497 |
| Depreciation – Supplemental | 222 | 170 | 144 | 133 |
| Depreciation/Depletion | 222 | 170 | 144.00 | 133 |
| Deferred Taxes | -4 | -4 | -- | 11 |
| Unusual Items | 218 | 84 | 12.00 | 68 |
| Equity in Net Earnings (Loss) | -- | -3.00 | -144 | |
| Other Non-Cash Items | 258 | 174 | 136 | 339 |
| Non-Cash Items | 476 | 258 | 145 | 263 |
| Accounts Receivable | -623 | -806 | -103 | 222 |
| Inventories | -137 | -151 | -3.00 | -73 |
| Prepaid Expenses | -162 | -98 | -173 | -165 |
| Accounts Payable | 7 | 121 | 29 | 138 |
| Payable/Accrued | 373 | 207 | 6 | 58 |
| Changes in Working Capital | -542 | -727 | -244 | 180 |
AMD Cash Flow has an overall positive cash flow. Recovering from a predicted bankruptcy at the time, AMD was able to secure their climb in net income once the company made huge strides with their Ryzen Processors and next generation Radeon graphics cards. From 2017 to 2018, there was a surge in Accounts Receivables by $703M as manufacturers demanded for their next generation Ryzen desktop and mobile processors.
AMD has a continued drive to lead into the next years and with another generation of Ryzen, processors coming to release by end of 2020, a similar trend is expected as through projected costs to performance exceeds what Intel has planned on their next release. AMD has re-entered the datacenter computing industry with their next line-up of EPYC processors to reach the professional market. In the event that AMD, fails to account for Nvidia’s drive to continue their lead in graphics computing, AMD could fall short of delivering top tier performance numbers for the second largest of their technology field.
Cash Flow & Liquidity
| Cash Flow ($ in In millions of USD except for per share items) | Year Ending Dec 2019 (Update) | Year Ending Dec 2018 (Update) | Year Ending Dec 2017 (Restated) | Year Ending Dec 2016 (Update) |
| Cash from Operating Activities | 493.00 | 34.00 | 12 | 90 |
| Purchase of Fixed Assets | -217 | -163 | -113 | -77 |
| Capital Expenditures | -217 | -163 | -113 | -77 |
| Sale/Maturity of Investment | 325 | 45 | 223 | 342 |
| Purchase of Investments | -284 | -123 | -222 | -- |
| Other Investing Cash Flow | 27 | 71 | 58 | 2 |
| Other Investing Cash Flow Items, Total | 68 | -7 | 59 | 344 |
| Cash from Investing Activities | -149 | -170 | -54 | 267 |
| Other Financing Cash Flow | -7 | -1 | -13 | -4 |
| Financing Cash Flow Items | -7 | -1 | -13.00 | -4 |
| Issuance (Retirement) of Stock, Net | 523 | 70 | 20 | 687 |
| Issuance (Retirement) of Debt, Net | -473 | -41 | -40 | -561 |
| Cash from Financing Activities | 43 | 28 | -33 | 122 |
| Net Change in Cash | 387 | -108 | -75 | 479 |
| Net Cash - Beginning Balance | 1.08M | 1.19M | 1.27M | 785 |
| Net Cash - Ending Balance | 1.47M | 1.08M | 1.19M | 1.26M |
| Liquidity Ratio: Current | 1.95 | 1.78 | 1.76 | 1.88 |
| Liquidity Ratio: Quick | 1.43 | 1.21 | 1.07 | 1.17 |
| Liquidity Ratio: Cash | 0.64 | 0.58 | 0.8 | 0.94 |
(Has your company generated cash and will it continue to generate cash going forward?)
Capital Structure & Financial Leverage
(Break Down Company’s Debt)
(What kind of debts do they have, Do they get their financing from loans, bonds, selling common stock, preferred stock, a combination? List where their primary financing comes from)
TABLES of DEBT and Liabilities (last 2 years)
SELECTED FINANCIAL DATA
In addition to the information presented above, you will provide the following slides. The
first slide, titled
SELECTED FINANCIAL DATA
, which has the most important
financial numbers from the last two years. This could be information from the main
financial statements. From IS you could include revenue, gross profit, operating profit,
interest expense, EBITDA, and net income. From SOCF you include operating cash flow,
investing cash flow, financing cash flow, and change in cash. From the BS, assets, cash
and cash equivalents, liabilities, total debt, shareholder's equity. If you feel other numbers
are significant for your particular company, feel free to include them as well.
KEY RATIOS
The second slide, titled
KEY RATIOS
, should have all relevant financial ratios for the
last two fiscal years that you have calculated for the purpose of the project.
To earn the
max points, apply 10 relevant ratios we learned in chapter 14 to support your
conclusion.
Conclusion
Final Recommendation
The purpose is to summarize all of your findings. You can include a summary of what
they do, its income performance, its cash flow ability, its overall financial position
(balance sheet). Also include non-financial factors that you think impacts the assigned
investment decision. Conclude with your final recommendation.
If the company is rated
by one of the major risk rating agencies, Standard and Poor's, Moody's, or Fitch
Ratings, include the rating that has been assigned by those parties, or if you can find
another 3
rd
party rating from an analyst on the stock include this. I know this may
not be as easy to get, so just a marginal point total is earned here.
The last slide
should list your references where you retrieved the financial statements.
References
New AMD-Powered Supercomputers Unleash Discovery and Accelerate Innovation https ://ir.amd.com/news-releases/news-release-details/new-amd-powered-supercomputers-unleash-discovery-and-accelerate
AMD Unveils World’s First 7nm Datacenter GPUs -- Powering the Next Era of Artificial Intelligence, Cloud Computing and High Performance Computing (HPC) https :// ir.amd.com/news-releases/news-release-details/amd-unveils-worlds-first-7nm-datacenter-gpus-powering-next-era
AMD Delivers Best-in-Class Performance from Supercomputers to HPC in the Cloud at SC19 https ://ir.amd.com/news-releases/news-release-details/amd-delivers-best-class-performance-supercomputers-hpc-cloud
AMD Ryzen 3000 Sales Hit All-Time High, Ryzen 7 3700X & Ryzen 5 3600 Sales Reach 2x Total Number of Intel CPUs Sold https ://wccftech.com/amd-ryzen-3000-cpu-sales-all-time-high-versus-intel-9th-gen-core/
AMD Balance Sheet https ://finance.yahoo.com/quote/AMD/balance-sheet/
AMD Cash Flow https ://finance.yahoo.com/quote/AMD/cash-flow?p=AMD
AMD Income Statement https ://finance.yahoo.com/quote/AMD/financials?p=AMD
AMD 2019 Annual Report on Form 10-K https :// ir.amd.com/static-files/480b482b-79ee-4b43-bcda-0d86dedfeb04
AMD 2018 ANNUAL REPORT ON FORM 10-K https ://ir.amd.com/static-files/a388f1a0-6bbd-4218-96ec-d9cf41544e6b