While it had avoided sliding into the red, it said operating income, excluding ATI-related segments and acquisition-related charges, will be substantially lower than the previous three months.
AMD’s stock slumped 11.57% to $18.846 on the news Friday as analysts rushed to downgrade the stock. But bankers at Goldman Sachs had warned in a research note earlier this month that AMD faces weak fiscal results throughout the year as excess capacity in the supply chain will continue to weaken prices for CPUs.
Even Intel was affected by the gloom surrounding the sector and its shares fell 1.15% to $21.67 despite a long history of bettering AMD when hard times affect the sector.
AMD, which had added to the glut in the sector by ramping up capacity, said gross margin and operating income were impacted by significantly lower microprocessor average selling prices. It said this largely offset a significant increase in unit sales.
The Sunnyvale, California-based company has become a victim of its own success in overtaking Intel technically and opening the doors of PC market leader Dell, which hitherto had been an exclusive Intel customer.
Intel fought back and in September it announced plans for a major reorganization that will see it shed 10,500 workers in a move to save $5bn during the next two of years. It slashed prices of its older processors and revealed new ones to match AMD’s offerings.
AMD will report its results on January 23.
