Chipmaker Advanced Micro Devices is among the most recent casualties of the slowdown in technology spending. On Dec. 4 the chipmaker drastically cut its sales outlook, saying fourth-quarter revenue will drop about 25 percent from the third quarter’s $1.59 billion.
AMD blamed a cratering in demand for chips used in personal computers and servers, the machines that run corporate networks. The company cited “weaker-than-expected demand across all geographies and businesses, particularly in the consumer market.” The company is scheduled to report quarterly earnings on Jan. 22. Its warning comes three weeks after a similarly dire outlook from rival Intel, which cut the low end of its revenue forecast by $1.4 billion on Nov. 12.
The announcements reflect a steep drop in tech spending by corporations and consumers that’s taking a toll on the broader technology industry, forcing layoffs just this week at telecom stalwart AT&T and software maker Adobe. AMD’s announcement also underscores the company’s particular woes amid competition with Intel.
Losing Out on Netbooks
AMD shares dropped 2.7 percent, to 2.14, in early afternoon trading. On Oct. 16, AMD reported a third-quarter loss of $67 million on sales just shy of $1.6 billion, not including licensing revenue. The decline outlined on Dec. 4 would put this quarter’s revenue at less than $1.2 billion, or about $300 million below Wall Street analysts’ expectations.
AMD is hurting in part because of the new and growing product class of consumer netbooks, small and light notebook PCs that sell for less than conventional PCs. “AMD has a proportionally higher exposure to the consumer market than Intel, and the only part of the consumer market that’s growing right now is netbooks, where it doesn’t participate,” says Ashok Kumar, an analyst at Collins Stewart.
At least one analyst was quick to revise his forecast. Craig Berger of FBR Capital Markets cut…