Advanced Micro Devices Inc. (NYSE: AMD) is a chip and processor company that just can't win. It is leaderless for all practical purposes and now the company has guided down its results yet again. Today's news may bode poorly for Intel Corp. (NASDAQ: INTC) as it had previously guided to a more realistic number and as major PC makers are talking down guidance in PC sales.
The company said that third quarter revenue will now be down by about 10% versus a prior forecast for revenue to decrease 1%, plus or minus three percent. AMD is blaming weaker than expected demand across all product lines caused by the challenging macroeconomic environment.
Gross margin is going to be lower as well at about 31% rather than the previous expectation of approximately 44%. The margin drop is being blamed on an inventory write-down of about $100 million due to lower anticipated future demand for certain products. Third quarter gross margin was also negatively hit be weak demand causing lower than anticipated average selling prices in the Computing Solutions Group products and lower than expected utilization of its back-end manufacturing facilities.
AMD further said that operating expenses will be down about 7% sequentially because of expense control.
Shares of AMD are down about 6% at $2.98 in the after-hours and that is after a gain of 1.6% to $3.20 today. Let's count this as a 52-week low as the prior 52-week range was $3.09 to $8.35. Intel shares are down only about 0.4% on the news, at least so far, in part because Intel hit a new 52-week low and closed down 0.4% at $21.68 today.
JON C. OGG