AMD: Second-quarter revenue will fall short of estimates


by Cyril Kowaliski — 6:00 AM on July 10, 2012

Here's the latest in AMD's ever-growing string of misfortunes. After posting a $590 million loss last quarter, AMD proudly announced that its revenue would grow by 0-3% in the second quarter. Today, the chipmaker revised that forecast. Revenue is now expected to drop by "approximately 11 percent."

Whoops.

That's a sequential drop, by the way. Since AMD's first-quarter revenue was $1.59 billion, revenue for the second quarter will probably add up to around $1.42 billion. That would be about 10% below the $1.57 billion AMD posted in Q2 2011.

What went wrong this time? Here's what AMD has to say for itself:

The lower preliminary revenue results are primarily due to business conditions that materialized late in the second quarter, specifically softer-than-expected channel sales in China and Europe as well as a weaker consumer buying environment impacting the company's Original Equipment Manufacturer (OEM) business.

Translation: demand slumped toward the end of the quarter. If that's true, then other hardware makers undoubtedly felt the pinch, as well. We'll have to see how their own Q2 results turn out.

Happily, there may be a silver lining in AMD's disappointing results. The chipmaker's gross margin should meet guidance, and operating expenses should actually be 8% lower than expected, thanks to "tightly controlled expenses in the quarter." (AMD previously forecast $605 million in operating expenses.) Whether that prevents AMD from posting another loss remains to be seen. The company will announce its full second-quarter results after the bell on Thursday.

   
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