AMD (NYSE:AMD) today expanded its existing A-Series 4th generation Accelerated Processing Unit (APU) lineup with the new A10-7800 processor, which is based on AMD’s 28nm Kaveri architecture. The new APU comes with four Central Processing Units (CPU) and eight Graphics Processing Units (GPU), and offers support for UltraHD (4K) resolutions and new video post processing enhancements. AMD moved towards heterogeneous computing early last year and Kaveri is its first processor with a heterogeneous system architecture. The A10-7800 APU is a part of the second release of AMD Kaveri APUs, and competes with Intel’s Core i3 Haswell processor lineups.  AMD also announced the AMD A6-7400K and AMD A4-7300 APUs for consumers looking to upgrade their application and office experience on the PC.
Owing to a decline in PC shipments, a market share loss to Intel, and a late entry in new emerging markets, AMD incurred a heavy net loss in 2012. While it reported a net loss in 2013 as well, the renewed demand in its traditional PC segment and growth opportunities in new markets have helped AMD improve its financial and operational performance in the last few quarters. In 2013, AMD completed the restructuring phase which helped generate strong revenue by successfully ramping up a diverse set of new products at a quicker pace, compared to the past.
AMD claims that its 2014 A-Series APU, which combine the power of a multicore CPU with AMD Radeon graphics, are the most advanced and developer-friendly performance APUs from AMD to date. Around 47% of the Kaveri silicon is devoted to graphics, as compared to 31% in Intel’s Haswell chips.  Additionally, the graphics capability for Kaveri is based on the same technology that is used for Microsoft’s Xbox One and Sony’s PlayStation 4 gaming consoles. AMD believes that the compute and graphics technologies in its APUs lead the way for consumers to leverage the best technology in their gaming, office and multimedia applications, and raise the bar on the desktop PC experience. 
- What Happens To AMD’s Valuation If Embedded & Semicustom Revenue Declines To $2 Billion In 2016?
- What’s AMD’s Fundamental Value Based On Expected 2016 Results?
- AMD: The Year 2015 In Review
- How Is AMD’s Revenue & EBITDA Composition Expected To Change In The Future?
- AMD’s Q4’15 Earnings Review: What’s In Store For 2016
- AMD’s Q4’15 Earnings Preview: Things Could Turnaround In 2016
Last quarter, AMD witnessed an 8% sequential and 12% annual decline in its computing solutions group on account of lower desktop and chipset revenue, partially offset by higher notebook revenue. However, lower operating expenses improved the segment’s operating income, both sequentially and year-to-year. Growth in notebook shipments was driven by the rising customer demand for AMD’s Beamer and Kaveri APUs. With the launch of the A8 and A10 APUs, the company has upgraded its product portfolio in the desktop channel, which it believes will spur growth in the future. AMD expects its personal computing business to continue performing well as new designs are built with OEM partners.
Though AMD has significantly lowered its dependence on the PC market, it continues to derive a considerable portion of its revenue from the segment (including GPUs and APUs). The company expects the overall PC shipments to decline 7% to 10% in 2014. It intends to focus on growing in segments where it is under-represented, such as the commercial PC business. It claims to have a new set of commercial products in its pipeline with which it aims to drive growth in the segment in 2014. It has a number of design wins which will ramp up in the second half of the year.
AMD shipped over 80 million APUs between 2011 and 2012. The company expects shipments to rise to 150 million in 2014 and cross 300 million within a few years. 
Our price estimate of $3.79 for AMD is at an approximate 10% discount to the current market price.Notes: