AMD Faces 25% Revenue Drop Due To Weak Demand - InformationWeek

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Infrastructure // PC & Servers

AMD Faces 25% Revenue Drop Due To Weak Demand

The chipmaker's warning came about three weeks after rival Intel lowered its fourth-quarter earnings forecast.

Advanced Micro Devices on Thursday said revenue in the fourth quarter would be 25% lower than the previous quarter, because of weaker-than-expected demand for its products.

AMD's warning came about three weeks after rival Intel lowered its fourth-quarter earnings forecast. Both companies said they were experiencing lower-than-expected sales across all geographies and businesses. AMD said sales were particularly weak in the consumer market.

AMD said it expected revenue, excluding process technology license revenue, to be a quarter less than the $1.585 billion reported in the third quarter, when the company reported its eighth consecutive quarterly loss. The loss, however, was significantly narrower than the same quarter the year before, and the company said it reached its goal of operational profitability.

Nevertheless, chipmakers are struggling within an economic downturn that has taken a serious toll. The global semiconductor industry this year is projected to see its first revenue decline in seven years, brought on by lower spending on PCs and other electronic devices by consumers and businesses, according to iSuppli. Gartner also lowered its revenue projection for the industry, as well as the World Semiconductor Trade Statistics, an industry trade group.

AMD has taken steps to reduce expenses. The company has said it would cut its workforce by 3% and plans to spin off its manufacturing operations in a joint venture with Advanced Technology Investment Co., formed by the Abu Dhabi government. ATIC would have a 55.6% stake in the company, but AMD would have equal voting rights. The deal is expected to close in the beginning of 2009.

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