AMD warns of Q3 sales shortfall

AMD warns of Q3 sales shortfall

SAN FRANCISCO—Advanced Micro Devices Inc. (AMD) Thursday (Oct. 11) warned that its third quarter sales were lower than previously expected due to weaker demand across all product lines caused by macroeconomic difficulties.

AMD (Sunnyvale, Calif.) said preliminary results show that the company's revenue declined about 10 percent sequentially to $1.27 billion in the third quarter, which closed Sept. 29. AMD had previously said it expected sales to be between and $1.38 billion and $1.4 billion, a range of 1 percent to down 3 percent sequentially.

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AMD's third quarter sales warning comes one day after market research firms reported that third quarter PC sales were down more than 8 percent compared with the third quarter of 2011. Another market research firm, IHS iSuppli, predicted Wednesday that total PC shipments will decline this year for the first time since 2001. AMD is the No. 2 supplier of PC processors.

AMD said it now expects its gross margin for the quarter to decline to about 31 percent, less than the previous estimate of 44 percent. AMD said it cut its gross margin estimate due to a $100 million inventory write-down for lower anticipated demand for certain products.

Third quarter gross margin was also negatively impacted by weaker-than-expected demand, which contributed to lower average selling prices for the company’s processors and lower utilization of AMD's back-end manufacturing facilities, the company said.

AMD said its third quarter operating expenses are expected to decline about 7 percent from the second quarter as a result of tight expense controls. The company is expected to report its full third quarter results on Oct. 18.

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