Advanced Micro Devices (NASDAQ:AMD), the second-largest maker of processors for personal computers, cut its second-quarter sales estimate, below market expectations, saying the demand for personal computers was weaker-than-expected. Shares tumbled.
The Sunnyvale, California-based company said in a statement late yesterday that it expects revenue to have decreased about 8 percent in the quarter ended June 27 from the first quarter, compared with its previous forecast of down 3 percent, plus or minus 3 percent.
This implies revenue of about $948 million. Analysts were expecting $999.6 million, according to Capital IQ.
AMD also said today that gross margin will be lower than expected. The company now expects adjusted gross margin to be about 28 percent, compared with prior guidance of about 32 percent.
The weaker margin is due primarily to a higher mix of Enterprise, Embedded and Semi-Custom segment sales and lower than anticipated Computing and Graphics segment APU unit volumes, AMD said.
Shares dived 17.4 percent to $2.04 at 9:45 a.m. in New York, expanding slump over the past 12 months to 53 percent.
The company has been shifting focus to gaming consoles and low-power servers but progress has lagged Wall Street's expectations due to intense competition from Intel and new competitors designing low-cost and power-efficient chips.
In April, AMD said its first-quarter loss widened as its revenue slumped, to $1.03 billion, and the company said it would exit its defense-server systems business.
AMD’s disclosure follows a series of negative signs in the PC sector, including Intel’s move in March to cut its outlook for the first quarter.
AMD will report second-quarter results after market close on July 16.