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Xbox One and PlayStation 4 make AMD profitable once more

AMD (STOCK)

AMD is profitable again. After over a year of substantial losses, the chipmaker managed to pull in a profit of $48 million for the third quarter of 2013, on an improved $1.46 billion in revenue. Needless to say, that's very good news for the troubled company, which lost $29 million last quarter and lost $131 million this time last year. But it may not be enough good news given how AMD made that money: the Xbox One and PlayStation 4 game consoles.

Back in the black, but still plenty to prove

AMD said that the CPU business actually continued to decline during the quarter — 6 percent sequentially, and 15 percent year over year. The reason AMD is back in the black is because the semicustom chips it builds for specialized products like the PlayStation 4 and Xbox One helped the company's Graphics and Visual Solutions business more than double to $671 million in revenue. The problem is that while AMD wants to continue to grow that business substantially, the company hasn't proven it can do that quite yet. The bump from game consoles in particular will likely be short-lived. Just last quarter, AMD admitted as much, saying that video game console revenue might fall off after the holiday season, and that its royalties from video game consoles will decrease over the long term. The company's also only projecting revenue growth of five percent next quarter.

Still, it looks like AMD is on the road to recovery, and might have bought itself time to execute its plans: more semicustom chips, some ARM-based server and embedded chips, and ways to leverage its wins in the game consoles space into wins for its PC graphics chips as well.

The Verge
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