Saturday, May 25, 2024

AMD Leaves Intel’s Shadow and Continues to Impress

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Last week was an interesting week for AMD. Intel, its chief rival, posted financial results that showcased several continuing problems in that company. Those problems likely caused Intel’s board to make their interim CFO/CEO the permanent CEO.

AMD, in contrast, significantly strengthened its executive team with an addition from BlackBerry at the senior vice president (SVP) level. It also reported surprisingly strong financial results, which was particularly noteworthy given the problems associated with the collapsing crypto currency market.

AMD’s Interesting Staff Changes

AMD made a number fascinating and critical staff changes. The most interesting was hiring BlackBerry’s Sandeep Chennakeshu, whom I’ve known for some time. Sandeep isn’t just an excellent and experienced manager, he is a car guy. He lead some of BlackBerry’s most interesting car efforts surrounding QNX (which still dominates both automotive and nuclear operating system markets).

His job will be to bring together AMD’s CPU and GPU efforts and create more compelling synergies between both. A surprisingly broad pedigree accompanies him, covering both processors and software. That gives him the needed breadth to create new solutions that better highlight AMD’s sustaining competitive advantage of having both a viable CPU and GPU business.

Mirroring this somewhat is moving Darren Grasby into the SVP sales roll, a position that has been vacant for a while. This will allow AMD to better integrate its efforts across product lines and increase sales efficiencies in line with this tighter coordination between GPU and CPU groups. This greater synergy should significantly enhance the effectiveness and efficiency of the existing AMD sales force, suggesting additional growth acceleration once the new organization settles and the salespeople come up to speed on their expanded portfolios.

Forrest Norrod, one of the strongest enterprise executives in the industry, took the role of SVP over the AMD Datacenter and Embedded Solutions group. He, too, will focus on taking this unique CPU and GPU advantage more effectively to market, and given his deep background in the segment, the result should be equally impressive.

All three men are impressive candidates with strong pedigrees. These moves highlight a major pivot by AMD to accelerate the use of its sustaining CPU and GPU advantages before Intel can roll out a similar strategy in a couple of years.

One final promotion that was well deserved was Mark Papermaster’s promotion to SVP. I wasn’t a fan of his hiring, but his excellent execution has been critical to AMD’s success, suggesting my initial impressions were dead wrong. This was a well-deserved promotion for a guy who has uniquely stepped up and helped ensure AMD’s success since his arrival.

This all sets the stage for AMD’s coming 7nm products, which, given Intel hasn’t even built its 7nm plant yet, should beat that company to market by years.

AMD Financials

These staffing changes came on top of AMD’s very strong results against a weakened Intel. AMD’s revenue was up 23 percent year-over-year, driven by both CPU and GPU growth. Margins improved 4 points from 34 to 38, which approaches Apple’s stunning margins of around 42 percent. Given the weakness of the crypto market, which uses a lot of graphics cards, this margin increase was largely due to graphics performance, which is, in and of itself, pretty amazing.

Annual operating income jumped from $127M to $451M and quarterly net income (non-GAAP) jumped from $8M to a net gain of $87M with $79M free cash flow, freeing up a lot of cash for general R&D, expansion, and new product development. Annual earnings per share also jumped in line from a $.03 loss to a $.32 gain, which is also impressive given both Intel and NVIDIA earnings.

AMD Is on the Move

Taken together, AMD’s staffing changes and financial results create the impression of a vastly strengthened company due to Lisa Su’s excellent leadership. The company seems to be devoid of scandal, is showcasing decent executive retention and acquisition, and is making intelligent staffing choices to assure its continued future growth. AMD is largely drama-free and focused on execution, which is reflected in its leadership and results. That is the way it should be, and I remain impressed with this firm’s execution of late. Personally, I particularly appreciate the lack of drama.

Photo courtesy of Shutterstock.

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