AMD - Advanced Micro Devices, Inc. - Credit Suisse 2013 Technology Conference Transcript

    Ticker:AMD
    Company Name:Advanced Micro Devices, Inc.
    Event Title:Credit Suisse 2013 Technology Conference Transcript
    Event Date:03-Dec-2013
    Event Time:04:00 PM ET

    Presentation



    Analyst

    Why don't we go ahead and get started. I would like to welcome everyone to this afternoon session with Advanced Micro Devices. My pleasure to introduce Devinder Kumar, Chief Financial Officer of AMD we're set up for a fireside chat please if you have any questions raise you hands we will give you mic we will try to make this as informal as possible so maybe I can kicking of where are you in the rest of the management team have really being focused on kind of repositioning the company over the last couple of years whether that's manufacturing -- or even end market focus maybe it would be helpful for anybody new to the story then Rory if you can just kind of bring us up to date what the strategy and kind of where are you in that strategy.

    Corporate Participant

    Yeah I think the way I look -- it is we have being -- but if you go back even before while you join the company in the 2011 time frame. We did kind of a evaluation of the company, the PC market, the markets we play in and the IP we have and this is about two three years after we had the acquisition of ATI with the graphic technology that came to us as well as becoming fabulous as you mentioned and now you look at the company and say where the market is headed and at that point it became clear to us there were three things we talked about, we talked about consumerization, we talked about the cloud and then we talked about where is this PC market headed and what's going to happened to it longer term Apple had introduce the iPad, the iPad was taking off. Okay, the PC market going to continue growing that it has for the last 30 plus years or is something going to fundamentally change and we look that it will a view point on diversification overall and came on the strategy say continue to protect and playing the PC -- but it's very competitive from a standpoint of being the smaller guy in the PC market in graphics we got pretty good from a view of the technology we have but then we said that there are other market that we are not focused on which are growing in even markets then what other markets are growing.

    All of that matter we have very low market share in those businesses and we are focuses on it we could increase market share so, we identified what is -- we have the 70-customer market that we just introduce some products and I'll talk about the later. We had an embedded market with our x86 technology that result we had like 3% or 4% market share focused we could increased that. Then we have the professional graphics where we had sub 10% market share despite the fact that this is really good technology why is it that we are having such a low market share in the business to the gross margins are significantly higher than the corporate average. Tablets are coming into place, we have the ultra low power. And then finally as part of the acquisition that we did in March 2012, we looked at the server market.

    We were very successful about ten years ago in the server market x86 base with the Opteron product but that really has kind of fallen by the wayside. We have 4% to 5% market share. But dense servers is where we saw the growth is. The dense servers are growing anywhere from 25%, 30% a year, small base.

    But we think a few years from now that could be a 20 to 25% total market share. And that focus with the management team in particular with Rory coming on board, Lisa Su who has joined us from Freescale, Mark Papermaster with Cisco and Apple experience came in, I took on the CFO role and we have seven new players at the management ranks. We have embarked on a transformation of the company whereby we wanted to get 20% of our revenue in this quarter that just ended.

    I'd say the quarter we are in coming from the growth businesses and laid out the target to say by the 2015 timeframe we want to go ahead more than 50% of our market in our business coming from the growth area as we call in and that's what -- the last two years have been one of execution, the PC market shifted dramatically in the middle part of 2012 and in some sense even though there was bad news it bore out the strategy, we talked about in the 2011 timeframe.

    And since then we've got the reset, restructure phase of the company that's over, we got in the kind of the acceleration, execute phase and the semi-custom product was the first kind of tangibles and significant proof points of transforming the company whereby more than 30% of our revenue today is coming from non-PC dependency but as two years ago, 95% of the revenue was coming from the PC space so, that's where we had and it's gone I think fairly well and we are looking for the next couple of years.

    Analyst

    I want to get to the five growth pillars. But first I want to a little bit about the core PC market and kind of get your views there. You have given I think whether it's realistic or may be a little bit more pessimistic deal of the market then your chief arrival on that space.

    Kind of curious where do you see unit growth this year and next? And if you look at geo product portfolio, this year was pretty robust, which one could be the Temash. Temash, finally getting you into the tablet segment of the market. How do we think about your roadmaps over the next several years especially as you deemphasized or refocus elsewhere?

    Corporate Participant

    Yeah. I think it was what I talked about the PC space. I have been in several ones, this morning the whole day and people asking about the AMD calling the market in 2014 down 10% compared to 2013. If you rewind the clock exactly a year ago, everybody have their view after the dramatic shift in the PC market in the middle of 2012, what's going to happen in 2013.

    And if I go back and I look at every forecast that's been put out and then on an actual basis track every quarter looking at what we thought would happen in the January timeframe for 2013 and every quarter since then we have been more right than wrong. Call it pessimistic, call it realistic, call it conservative but in the end every forecast that's come out from the professional guys and even our competition as you mentioned has been taking down the numbers and 2013 is ending up 10% down.

    We are calling 10% down in 2014, I don't think anybody else is doing that. So, some folks are accusing those of being too conservative, maybe there is going to be a recovery there but in some sense whether it's 5% or 10%, it doesn't matter, it's a declining market. Even if you call it flat, the competition in particular having the asset that they have has to fill those assets and utilize those assets and utilize those assets to start units. And we are transforming as a company. And so, from a conservative standpoint, it's nothing else, we are saying, okay, the PC market is down 10%, can you now construct a plan and a strategy to go and grow in this other businesses and that's really the bottom line in terms of how we are planning 2014.


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