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AMD’s Back Is Against the Wall

AMD says its revenues will be down about 10% sequentially, not the 1% plus or minus 3% it had been forecasting

After the market closed in New York Thursday AMD warned that its Q3 wasn't going to cut the mustard.

Hoping against hope for better results AMD waited until the last minute to take down its guidance. Intel saw the handwriting on the wall in September and figured things weren't going to get much better. Intel reports Tuesday, AMD reports Thursday.

IDC and Gartner broke the bad news Wednesday about the Q3 PC market. It kinda sucks, down 8%. Only Lenovo is up. iSuppli said shipments are poised to fall year-over-year for the first time since 2001.

AMD says its revenues will be down about 10% sequentially, not the 1% plus or minus 3% it had been forecasting, because demand for its chips is "weaker than expected across all product lines." That implies revenue of $1.269 billion.

Wall Street was expecting AMD's revenues to decline 2% to $1.38 billion.

Its gross margin hopes for profitability have been chopped from 44% to 31% due to an inventory write-down of approximately $100 million afternoon after a no-show back-to-school season with kids, even seven-year-olds, lobbying for iPads or smartphones.

The lower-than-expected demand took its toll on ASPs. Even AMD's manufacturing facilities aren't being fully utilized.

It said its operating expenses would decline by about 7% sequentially because of tight controls.

Its stock was down as much as 10.93% to $2.85 after-hours. Intel is at a 52-week low.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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