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AMD’s CEO Lisa Su: Virtual Reality Could Grow to 100 million Users in 5 Years

AMD is focused. Those three words best describe AMD’s quarterly results, growing in revenue from $1.03 to 1.22 billion (YoY). Biggest gain was recorded in the Radeon and Ryzen business, i.e. Computing and Graphics. That business segment grew 51%, recording full quarter of RYZEN revenue, and of course, growth in eSports and surprisingly to Wall Street, cryptocurrency demand.

In an recorded interview with Sushie Gharib from Fortune, AMD CEO Lisa Su stated that “there is no one thing in magic, when it comes to turning around large corporations, but it is all about focus.” Gong back to the drawing board with CPU and GPU roadmaps certainly proves that.

All the innovations happening with the 2018 GPUs, such as combining HBM2, GDDR6 and 3D NAND memory on the GPU/APU side are being developed in order for AMD to win in two focus markets. Lisa continued; “Virtual Reality, I think, is the biggest thing over the next 3-5 years. When we really think about how do you really experience games differently. Think about VR as just a completely different experience. It’s an immersive experience, it can bring you into the new world. So, we [at AMD] love Virtual Reality, we believe we are one of leaders today. You know, we put out some of the first technology that enables you to bring VR [experience] to everyday consumer. Today, there is maybe a couple of million people using VR, we’d like to see that to be 100 million over the next five years.”

However, GPU is not enough. The company had to change the way how CPU and GPU teams work (source of big animosity in the past), and that the only way AMD can succeed is by improving the platform. After the launch of Ryzen/Epyc and RX Vega, the big focus shifted to innovation in changing the way how CPU and GPU work together. “We love high performance computing [HPC], so if you think about datacenters and what powers the cloud, we actually have some new technology that we call our ZEN processor. You know, ZEN is my favorite codename, but really its all about putting high performance out there, technologies that power next generation of data centers. We believe datacenters will be a very high growth area over the next couple of years.”

For example, here at VR World we don’t see Vega challenging for the win against NVIDIA, as Vega is literally a proof-of-concept for new technology which will probably see future AMD GPUs probably going as far as using the big, 4094-grid TR4 socket used by server and workstation processors (EPYC), as well as the new king-of-the-hill desktop CPU, RYZEN Threadripper. Real battle comes in 2018-19, with top-to-bottom CPU and GPU architectures using 7nm process, bringing much needed power reduction.

Perhaps the key of AMD future lies in the “all hands on deck” decision to “This is a big bet for the company. We decided that if you want to compete in high performance processors, we needed to start from scratch and do a brand new design. Zen is that new design.”

The results of this new focus on VR and HPC are in, and at the time of writing, AMD Stock is trading at $15.65, a record high not seen since 2007. AMD Q2 2017 summary is listed below:

  • On a GAAP basis, revenue was $1.22 billion, up 19 percent year-over-year, driven by higher revenue in the Computing and Graphics segment. Revenue was up 24 percent sequentially, driven by increased sales in both business segments. Gross margin was 33 percent, up 2 percentage points year-over-year due to a richer product mix and a higher percentage of revenue from the Computing and Graphics segment, driven by the first full quarter of Ryzen processor sales. On a sequential basis, gross margin declined 1 percentage point due to a higher percentage of revenue from the Enterprise, Embedded and Semi-Custom segment. Operating income was $25 million compared to an operating loss of $8 million a year ago and an operating loss of $29 million in the prior quarter. Net loss was $16 million compared to net income of $69 million a year ago and a net loss of $73 million in the prior quarter. Loss per share was $0.02 compared to diluted earnings per share of $0.08 a year ago (which included a pre-tax gain of $150 million related to our ATMP JV transaction) and a loss per share of $0.08 in the prior quarter.
  • On a non-GAAP(1) basis, operating income was $49 million compared to operating income of $3 million a year ago and an operating loss of $6 million in the prior quarter. Net income was $19 million compared to a net loss of $40 million a year ago and a net loss of $38 million in the prior quarter. Diluted earnings per share was $0.02 compared to a loss per share of $0.05 a year ago and a loss per share of $0.04 in the prior quarter.
  • Cash, cash equivalents, and marketable securities were $844 million at the end of the quarter, compared to $943 million in the prior quarter.