Advanced Micro Devices is cutting its fourth-quarter sales outlook by 25 percent, citing a lack of demand for its processors, graphics and other products. In November, Intel also cut its fourth-quarter outlook as the chip giant expects less demand for its notebook and desktop processors. For AMD and Intel, the financial crisis and reduced consumer spending mean that there is now less demand for PCs that use their microprocessors.
is cutting its fourth-quarter sales outlook,
citing a lack of demand for the company's microprocessors and other products
both in the Unites States and overseas.
AMD, the world's second largest producer
of x86 processors for desktops, notebooks and servers, issued the warning about
its fourth-quarter revenue outlook Dec. 4. In a statement, the chip company
said its fourth-quarter revenue will be about 25 percent less than the $1.59
billion in revenue AMD posted in the third
financial crisis on Wall Street and the anticipation of less consumer spending
this holiday season
mean that there has been less demand for AMD's
processors, graphics technology and other products. "The decrease [in
revenue] is due to weaker-than-expected demand across all geographies and
businesses, particularly in the consumer market," AMD
said in its statement.
In November, Intel
issued its own warning about the fourth quarter. With reduced demand
for PCs and other hardware, Intel
is now expecting fourth-quarter revenue of $9 billion, "plus or minus $300
rather than the previous expectations of $10.1 billion to
There has been little good news for the IT sector this week. Gartner
and IDC each released reports the week of Dec. 1 that showed sales and
shipments of servers
had slowed in the United
States and across the globe. On Dec. 3, IDC
issued a report predicting that PC vendors would ship far fewer desktops and
notebooks in 2009
than in 2008 and that revenue from PC sales would fall.
While both Intel and AMD are affected by
overall PC sales, AMD relies more on sales of
consumer desktops and notebooks as well as sales of PCs to small and midsize
businesses. That seems to be one reason why AMD
referred to consumer sales in its statement.
John Spooner, an analyst with Technology Business Research, said he believes
that AMD and Intel are both reacting to the
overall economy and both companies are trying to adjust their chip inventories
to better match the reduced demand for PCs and servers.
"I think that what they appear to be doing is drawing down current
inventories of processors and delaying orders as much as possible,"
Spooner wrote in an e-mail. "This is having an accordion affect on AMD
and Intel, which is causing their sales to fall below expectations in [the
fourth quarter of 2008]. It's also going to lead to higher levels of
inventories. At some point, though, the PC makers will have to order more
chips. Right now, the question is when."
AMD is expected to release its full fourth-quarter
numbers Jan. 22, 2009. In the third quarter, AMD
reported a loss of $67 million, or 11 cents per diluted share. AMD
also cut another 500 positions to better control costs.