Chipmaker AMD's Revenue Forecast Disappoints
Advanced Micro Devices forecast third-quarter revenue below expectations on Thursday as it struggles with a weak global economy, tepid PC sales and relentless pressure from top chipmaker Intel.
Like others in the PC industry, AMD has been hit by a shaky global economy and consumers' growing preference for tablets and smartphones, but analysts also have said that AMD may be losing market share to processors made by Intel and Nvidia .
On Thursday, AMD said its second-quarter revenue was $1.41 billion, in line with its warning last week, compared with $1.57 billion a year ago. It estimated that third-quarter revenue would fall 1 percent from the second quarter, plus or minus 3 percent.
Analysts had expected AMD would have $1.50 billion in revenue for the current quarter, according to Thomson Reuters I/B/E/S.
AMD's stock declined move than 2 percent in after hours trading after its earnings report.
Last week, AMD warned that its second-quarter revenue would fall 11 percent from the first quarter.
On Tuesday, Intel, a barometer of the PC industry, cut its 2012 revenue growth forecast to between 3 percent and 5 percent, from a prior forecast of "high single-digit growth."
Concerns about AMD's execution and fears that global PC sales could be worse than expected, with emerging signs of weakness in China, have helped push the chipmaker's stock down about 38 percent since the end of March.
"I don't think there's any reason to have any confidence in their guidance, as weak as it is. It's below seasonal, but I have to believe there's very low visibility in this environment right now," said Alex Gauna, an analyst at JMP Securities.
In recent years, AMD has carved a niche providing processors for low priced laptops, with Intel dominating higher-end PCs. But Intel may be winning market share as AMD ramps up production of its new Trinity and Brazos 2.0 processors, some analysts have said.
And with PC manufacturers planning to launch cheaper laptops using inexpensive chip designs licensed by ARM Holdings, AMD could face additional competition.
"I continue to believe this is a story that's structurally disadvantaged relative to the greater momentum behind ARM-based computing and the greater ability to invest and innovate of Intel," Gauna said.
AMD, based in Sunnyvale, California, had a quarterly net profit of $37 million, or 5 cents a share, compared with a net profit of $61 million, or 8 cents a share, a year-ago. Adjusted earnings were 6 cents per share.
Shares of AMD fell 2.88 percent in extended trade after closing down 0.61 percent at $4.86.