Today AMD announced their Q1 FY 2019 earnings. Revenues were down 23% year-over-year, coming in at $1.27 billion. Gross margin for the quarter was 41%, up 5% from a year ago, but operating income was down 68% to $38 million. Net income was down 80% to $16 million, and earnings-per-share were down 87.5% to $0.01. But why?

AMD’s recent success has been driven primarily by their Computing and Graphics segment, however revenue for this segment was down 26% from a year ago, coming in at $831 million. AMD is stating that lower graphics channel sales are the primary reason, and with the crash of cryptocurrency, this makes sense. However, the decline was offset by increased client processor and GPU sales. Operating income for this group was $16 million, compared to $138 million a year ago.

Enterprise, Embedded, and Semi-Custom revenue was down 17% from a year ago, coming in at $441 million. The decline can be mostly attributed to declines in semi-custom revenue, which is mostly consoles that have been on the market for quite a few years now, but some of the decline was offset by higher server sales, and AMD stated that their margin growth for this quarter was driven by the ramp of Ryzen and EPYC processor sales, as well as datacenter GPUs. Despite lower revenue, the operating income for this group is up 385% to $68 million, although $60 million of that is attributed to a joint venture with THATIC.

All Other had an operating loss of $46 million, compared to a loss of $32 million a year ago.

AMD also announced that their Navi GPU and Rome CPU are going to launch in Q3 of this year which should help bolster sales then, but may impact short-term sales as customers wait for the new products to launch. AMD is forecasting revenue for Q2 to be down approximately 13% year-over-year, with a forecast of $1.52 billion plus or minus $50 million.

Source: AMD Investor Relations

Source: AnandTech – AMD Q1 FY 2019 Earnings Report: Revenue Down But Margins Up

Today Apple announced their earnings for the second quarter of their 2019 fiscal year. Revenue was down 5.1% to $58.0 billion this quarter. Gross margin for the quarter was 37.6%, down from 38.3% a year ago. Operating income was down 15.6% to $13.4 billion, and net income fell 16.3% to $11.6 billion. This resulted in earnings per share of $2.46, down 9.9% from a year ago.

Although Apple no longer provides individual unit sales of their products, iPhone sales continue to struggle. Revenue for this quarter for iPhone was down 17.3% to $31.0 billion, and this is at a time where per-unit prices are at their highest in history of the iPhone. What once seemed like an unstoppable force has met the immovable object of market saturation.

Mac sales were also down, but only 4.5%, with revenues of $5.5 billion for the quarter. As with iPhone, we are no longer privy to the unit sales numbers though.

iPad has seen a bit of a resurgence after several years of revenue declines. iPad revenue was up 21.5% over Q2 2018, with revenues of $4.9 billion for the quarter. Here Apple has not only increased the price of their Pro models, but also lowered the entry level price for the basic iPad, and this two-tiered approach seems to have helped correct the declining sales, at least for now.

Apple’s ever-expanding list of products in their Accessories group continues to do well, so much so that the group is now called Wearables, Home and Accessories. Lack of an Oxford comma can be forgiven since this segment had revenues increase 30% to $5.1 billion for the quarter.

Finally, Apple’s Services segment also continues to grow, thanks to their 1.4 billion active devices. Services, which includes iTunes, Apple Music, iCloud, and other products grew 16.2% to $11.4 billion. If you divide that by active devices, Apple is generating $8.18 per device in service fees in just three months.

Apple has approved a cash dividend of $0.77 per share, and authorized a repurchase of an additional $75 billion in shares. Looking forward to Q3, the company is expecting revenue between $52.4 and $54.5 billion, with gross margin of between 37% and 38%.

Source: Apple Investor Relations

Source: AnandTech – Apple Q2 FY 2019 Earnings Report: iPhone Struggles But iPad And Services Expand