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AMD slashes third quarter revenue and gross margin forecast

Expecting to report a bad Summer
Fri Oct 12 2012, 13:44
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CHIP DESIGNER AMD has cut its third quarter revenue and gross margin forecasts citing weak demand.

AMD's lacklustre Bulldozer processor line has left the firm desperately trying to compete with Intel in the desktop market while its more impressive accelerated processor unit (APU) range has been rebuffed by Intel's multi-million dollar ultrabook marketing push. Now AMD has revised down its estimate of third quarter revenues, which it says will be around 10 percent lower than the previous quarter.

Even more worrying for AMD is its lower forecast for gross margin, the difference between selling an item and the cost to make it, down from 44 percent to 31 percent. Effectively AMD said its cost of doing business has risen considerably higher, although it laid most of the blame on a $100m inventory writedown.

AMD couldn't avoid admitting the blindingly obvious and said that its writedown of inventory was due to "lower anticipated future demand for certain products". The firm has suffered through a disappointing 2012, and earlier this year it announced a $580m loss back in April.

While AMD didn't comment on its profit forecast, the fact that it has slashed its gross margin estimate is not a good sign for the near to medium term future. AMD is scheduled to announce its third quarter 2012 financial results next Thursday. µ


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