Advanced Micro Devices has lowered its quarterly sales outlook.
Second-quarter sales likely will drop 9% to $1.22 billion from the earlier quarter, the company said in a statement.
Investors had expected AMD’s second-quarter results to be flat or down slightly from the previous quarter, given seasonal trends and AMD’s previous forecast announced during its first-quarter results. Analysts had expected $1.3 billion in revenue.
Wall Street was not pleased with the revised outlook and sent AMD stock down more than 1% to $23.56 on the New York Stock Exchange following the announcement.
Some industry watchers speculate that part of AMD’s problem is chief rival Intel, which AMD is suing for allegedly muscling AMD out of the market with strong arm, anticompetitive tactics.
But Sunnyvale, California-based AMD’s recent trouble with Intel seems to be a simple case of pricing strategy. In June, Intel deeply discounted its prices to reduce its current inventory ahead of new chips planned for release in the second half. The forthcoming chips will be based on Intel’s new low-power microarchitecture, dubbed ‘Core.’
Indeed, AMD sales suffered in product categories where Intel had dropped its prices: entry-level and mainstream mobile and desktop processors.
Of course, AMD’s sales slowdown may also just reflect the broader sluggishness of the overall PC industry. And, the second quarter is seasonally the slowest.
Still, there likely will be evidence in AMD’s second-quarter earnings that the chipmaker remains a competitive force. The company said that it saw record sales for its single-, dual- and multi-socket Opteron processors for servers and workstations.
And the number two player may have another trick up its sleeve: Dell, the world’s largest PC maker. In May, Round Rock, Texas-based Dell announced it would no longer buy chips exclusively from Intel. Dell said it would begin using AMD chips in its high-end servers, which sent AMD’s stock price soaring at the time.
