AMD Shares Hit Three-Year Low After Issuing Q3 Sales Warning

Posted 10/12/2012 at 11:01am | by Paul Lilly

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Chip designer Advanced Micro Devices (AMD) on late Thursday warned investors that its third-quarter revenue will probably dip 10 percent from the previous quarter because of sluggish demand and a consumer preference towards tablet PCs. After hearing the news, AMD's stock took a beating, dropping below $3 per share to the lowest it's been in three years. The stock dipped even further today and is currently trading at around $2.86.

"The lower than anticipated preliminary revenue results are primarily due to weaker than expected demand across all product lines caused by the challenging macroeconomic environment," AMD said in a statement.

AMD isn't the only one affected by weaker than expected demand. The PC industry as a whole has been sluggish, with IHS iSuppli, Gartner, and International Data Corporation (IDC) all indicating a slowdown in consumer PC shipments this past quarter.

"There was great hope through the first half that 2012 would prove to be a rebound year for the PC market," said Craig Stice, senior principal analyst for computer systems at IHS. "Now three quarters through the year, the usual boost from the back-to-school season appears to be a bust, and both AMD and Intel’s third-quarter outlooks appear to be flat to down. Optimism has vanished and turned to doubt, and the industry is now training its sights on 2013 to deliver the hoped-for rebound. All this is setting the PC market up for its first annual decline since the dot-com bust year of 2001."

PC sales will inevitably jump once Windows 8 ships later this month, but that doesn't mean AMD can get away with ignoring the tablet market completely, nor does it intend to. Earlier this week, AMD unveiled its Z-60 Accelerated Processing Unit (APU) designed specifically for Windows 8 tablets.

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