AMD warns of bigger sales drop
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Advanced Micro Devices, the world’s second-largest PC processor maker, has issued a revenue warning, blaming “weaker-than-expected demand across all product lines caused by the challenging macroeconomic environment”.
A week ahead of its third-quarter earnings report, AMD said revenues would fall around 10 per cent compared to the second quarter. It had previously predicted a fall of around 1 per cent.
Its bigger rival Intel also issued a third-quarter revenue warning last month. The Silicon Valley neighbour, whose microprocessors feature in four out of every five PCs sold, said chip sales would probably be more than $1bn less than previously forecast. It also cited “weaker-than-expected demand in a challenging macroeconomic environment”.
Research firms Gartner and IDC reported on Wednesday that PC unit shipments slipped more than 8 per cent in the third quarter.
As well as economic conditions, they blamed inventory clear-outs ahead of the launch of Windows 8 this month, uncertainty about demand for the new operating system, the high prices of thin-and-light “Ultrabook” laptops and consumers preferring to buy smartphones and tablets.
AMD also reduced its gross margin forecast to 31 per cent from 44 per cent. It said this was primarily due to an inventory writedown of around $100m “due to lower anticipated future demand for certain products”.
AMD shares fell 9.1 per cent on the news in after-hours trading in New York to $2.91. They had already fallen 40 per cent this year. Intel shares hit a 52-week-low on Thursday before closing down 0.4 per cent at $21.68.
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