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AMD Lowers Sales Forecast, Citing Notebook Demand

AMD Lowers Sales Forecast, Citing Notebook Demand
A detailed view of a chipset from the Advanced Micro Devices Inc. (AMD) Opteron 6000 Series processor Source: AMD via Bloomberg

Advanced Micro Devices Inc., Intel Corp.’s main competitor in computer processors, said third-quarter sales will be less than it had predicted, citing weaker demand for notebook computers in Europe and North America.

Sales will decline between 1 percent and 4 percent from the $1.65 billion it recorded in the second quarter, Sunnyvale, California-based AMD said today in a statement. In July, the company had said that sales would rise “seasonally” in the third quarter from the preceding three months.

The announcement follows a similar forecast reduction by Intel, which cited weaker consumer demand in developed markets. The outlook also mirrors warnings from other chipmakers, including Texas Instruments Inc. AMD, which has been winning market share in notebooks, doesn’t have the presence in servers and business machines to offset the drop in consumer spending, said Hans Mosesmann, an analyst at Raymond James & Associates.

“It was a matter of time after Intel,” said Mosesmann, who is based in St. Petersburg, Florida. He has a “neutral” rating on AMD stock. “After a strong first half, the prospects of getting to normal seasonality was tough.”

Under the new forecast, sales this quarter would be $1.63 billion at most. That compares with the $1.71 billion average of estimate in a Bloomberg survey, compiled before today’s announcement.

Intel Cut

On Aug. 27, Intel, the world’s biggest chipmaker, cut its third-quarter revenue forecast, citing weaker-than-expected consumer demand for personal computers in mature markets.

That lower forecast highlighted a divergence between consumers, who are increasingly tightening belts, and companies, which lifted demand for computers and other technology gear. Intel said purchasing by business customers will keep gross margins from declining from the near-record 66 percent it is predicting for the third-quarter.

AMD rose 15 cents to $6.55 in late trading after gaining 14 cents to $6.40 on the New York Stock Exchange. The shares have tumbled 34 percent this year.

The company plans to make its full third-quarter report on Oct. 14.

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