Updated: Advanced Micro Devices declines to comment on news that it expects sales of its chips to fall 9 percent from its first-quarter results, saying to "stay tuned" for the earnings report on July
Microprocessor manufacturer Advanced Micro Devices waited until after business hours July 6 to announce that it has cut its sales forecast for Q2, saying it expects income from its chips to fall 9 percent from its first-quarter results.
The Sunnyvale, Calif., company had previously forecast that sales would be flat to slightly down from the prior quarter.
AMD is the worlds second-largest producer of microprocessors, trailing Intel of Santa Clara, Calif.
The company said it expected second-quarter sales of about $1.22 billion, an increase from a year earlier but below analysts average forecast of $1.31 billion, according to Reuters estimates.
Record AMD Opteron processor sales were driven by continued strong demand for single-, dual- and multi-socket configurations for servers and workstations, the company said in a statement.
However, sales of entry-level and mainstream mobile and desktop processors were down substantially, which led to the big sales falloff.
AMD spokesman Dave Kroll told eWEEK later in the evening that the company would have no comment at this time, saying "the lawyers have us on a tight leash on this ... youll have to stay tuned for earnings and find out more detail on that call."
In May, AMDs stock price increased on the news that PC maker Dell Inc. of Round Rock, Texas, would begin using AMD chips in its high-end servers and would terminate its exclusive chip-buying relationship with Intel.
Roger Kay, an analyst with Endpoint Technologies Associates, said AMD could be suffering from a combination of an industrywide slow second quarter and Intels aggressive pricing. The second quarter is usually a slow one in the PC space, before it picks up with back-to-school sales in the third quarter. In addition, Intel is cutting prices as a way of slowing AMDs momentum.
"AMD on the server side is certainly enterprise-focused," said Kay, in Wayland, Mass. "But on the desktop side, its heavily consumer. This may reflect a segment focus, and there may also be competitive pressure from Intel."
There are a number of factors weighing on consumers that may be feeding their reluctance to buy PCs, from their current systems being good enough and credit concerns to higher fuel costs and the delay of Microsofts Windows Vista operating system, Kay said. These may be enough to impact the entire industry for the rest of 2006.
"Theres enough negatives where I think its going to affect the whole year," he said, though he admitted that other industry observers are more optimistic.
AMD will report its second quarter 2006 results after market close on July 20. AMD will provide a real-time audio broadcast of the teleconference on the investor relations page of its Web site.
At the close of trading July 6, AMDs stock was at $23.83, down $0.07 cents on the day.
Editors Note: This story was updated to include additional financial detail and comment from an AMD spokesman.
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Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz