AMD Cuts Sales Target Second Time in Two Weeks
NEW YORK/SAN FRANCISCO - Advanced Micro Devices Inc. AMD.N on Wednesday issued its second warning in two weeks, cutting its second quarter sales forecast by up to a third from its original target and raising fears the company was falling farther behind its main rival as the PC industry they supply stumbles.
As shares of AMD dropped 4 percent, stock of rival Intel Corp.INTC.O , the No. 1 supplier of microprocessors, climbed 7 percent as investors judged that AMD was struggling to hold its own in a weakened PC industry.
"I think it is a disaster for AMD. They are falling behind the speed curve versus Intel at an increasing rate," said Robertson Stephens analyst Eric Rothdeutsch said. Rothdeutsch does not own Intel or AMD stock.
"PC demand has been weak...but I don't think this is a step down in PC demand," he said.
AMD said in a brief statement it now sees second-quarter sales of about $600 million, down from the $620 million to $700 million it forecast on June 18. In April it had projected sales of $820 million to $900 million.
An AMD spokesman declined to give details of the outlook.
"Two weeks ago they should have known the worst case scenario," said SG Cowen Securities analyst Mark Grossman, who does not own AMD stock. "Obviously the PC market is not very strong."
AMD's two top clients, Hewlett-Packard Co. HPQ.N and Compaq Computer Corp., have merged and expect to lose PC market share, while HP said earlier in the quarter that it was dealing with a glut of consumer PC inventory at its resellers.
In addition to HP's caution and prediction that even a modest upturn in corporate technology spending was unlikely this year, Apple Computer Inc. AAPL.O has cautioned its revenues will fall short of expectations in the June quarter.
That led Didier Scemama, European semiconductor analyst at ABN AMRO in London, to conclude AMD's warning "confirms that the PC market is disastrous at the moment and that the bad news will continue."
click here for full story.