AMD Slashes Q4 Forecast by 25% on Weak Processor Demand

By Jessica Davis  |  Print this article Print

Weak demand and supply chain inventory reductions for x86 microprocessors for the PC, notebook and server markets are said to be among the culprits in AMD's and Intel's reduced revenue forecasts for their fiscal fourth quarters. Microprocessor maker AMD issues an earnings warning saying consumer demand has particularly suffered.

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.

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.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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