AMD Lowers Q3 Sales Forecast

Advanced Micro Devices has lowered its third-quarter revenue forecast, citing lower-than-expected sales of processors for consumer notebooks. The maker of microprocessors and graphics chips said Thursday revenue for the quarter ended Sept. 25 would be down from 1% to 4% from the $1.65 billion in revenue reported for the previous quarter.

"The sequential decrease is due to weaker than expected demand, particularly in the consumer notebook market in Western Europe and North America," the company said in a statement. AMD reports third quarter earnings Oct. 14.

The chipmaker in July reported that second quarter revenue soared by 40% to $1.65 billion on strong sales CPUs and graphics processors used in laptop computers. At the time, AMD said it expected revenue to be up "seasonally" for the third quarter.

In the second quarter, AMD managed to narrow its losses to $43 million, or 6 cents a share, from $330 million, or 49 cents a share, the same period a year ago. The loss in the second quarter was due to the way the company accounted for the spinoff of its manufacturing operations into a new company Globalfoundries, which is bankrolled by Advanced Technology Investment Co., formed by the Abu Dhabi government.

AMD rival Intel has also cut its third quarter revenue forecast because of lower-than-expected sales of processors for consumer PCs. Intel last month said revenue would be between $11 billion, plus or minus $200 million. Intel's previous forecast was between $11.2 billion and $12 billion.

Before Intel's announcement, the possibility of weaker processor sales in the third quarter was predicted by analyst firm IDC. While the first half of the year saw a strong global market in terms of shipments and revenue, IDC observed weakening demand in the second quarter and said sales could remain weak in August.

IDC found that contract manufacturers working for major computer makers were cutting orders for processors and other components. "While the PC processor vendors re-iterated their solid outlook during their most recent earnings calls, the softness we've seen ultimately makes us concerned for end demand's pull on processors," IDC analyst Shane Rau said.

FURTHER READING:

AMD Spins Off GlobalFoundries Chip Making Unit

Intel Cuts Revenue Forecast On Slower PC Sales