AMD Slashes Q4 Forecast by 25% on Weak Processor Demand

AMD slashed its revenue expectations for its fiscal fourth quarter by 25 percent, citing weak demand for microprocessors, particularly among consumers.

Advanced Micro Devices, known for its x86 microprocessors, had forecast fourth-quarter revenues to be flat with the third quarter, but said in a statement issued Dec. 4 that fourth-quarter revenue would be roughly $1.19 billion. AMD posted third-quarter revenue of $1.59 billion.

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AMD says demand has declined across all geographies around the world. Its announcement follows a similarly chilly earnings announcement by its larger rival Intel in November. Intel cut its expected earnings for the fourth quarter to $9 billion from a previous range of $10.1 billion to $10.9 billion.

Analyst company FBR Research says the magnitude of the AMD shortfall raises the spectre that Intel may further cut its already lowered forecast.

"Clearly, global macroeconomic contraction is causing demand deterioration," FBR Research says in a brief report issued after the AMD statement. "For chip suppliers, falling demand is being compounded by supply chain inventory reductions, particularly among distributors."

Because unavailable credit constrains use of working capital, FBR Research observes in its report, "Chip vendors that recognize revenues on a 'sell-in' basis are getting hit harder than firms that recognize revenues on a 'sell-through' basis."

AMD is expected to release full fourth-quarter earnings results on Jan. 22.