AMD: Third quarter unravels amid weak demand, excess inventory

AMD: Third quarter unravels amid weak demand, excess inventory

Summary: AMD is hobbled amid weak demand and excess inventory. Company plans a $100 million writedown of excess product.

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AMD cut its revenue outlook for the third quarter for the second time amid "weaker than expected demand across all product lines caused by the challenging macroeconomic environment."

The news wasn't totally unexpected as some analysts already doubted AMD's forecast. AMD cut its third quarter outlook when it reported its second quarter results. Intel already warned the third quarter was rough. 

Specifically, AMD now expects third quarter revenue to fall 10 percent from the second quarter. AMD had projected revenue to be down 1 percent or so in its last warning.

The reason behind AMD's fall is obvious---PC sales have been clocked ahead of the Windows 8 upgrade cycle. Meanwhile, Intel is also struggling, but has a better product cadence and balance sheet.

AMD said that its third quarter gross margin will be about 31 percent, well below the 44 percent projected in the last warning. Why? AMD is saddled with excess inventory. The chipmaker said that it will take an inventory write-down of about $100 million due to "lower anticipated future demand for certain products."

The company added that it suffered from lower than expected average selling prices and weak utilization rates in its manufacturing efforts.

AMD said Sept. 18 that CFO Thomas Seifert would be leaving the company. Shares of AMD fell below the $3 mark in afterhours trading. 

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More on AMD's rough quarter:

 

Topics: Hardware, Processors, Servers, PCs

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10 comments
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  • Idea

    Hey AMD! put them foundries to work cranking out AMD branded ARM Chips.
    ammohunt
    • lol, only 1 problem.

      AMD doesn't have any foundries.
      nicholaas321
      • Umm

        They did just 5 years ago!
        slickjim
        • Umm

          That was 5 years ago.
          Letophoro
  • You know

    I really wanted an AMD Branded GPU but, being in a tech career, the lack of support for Linux means that I am limited in what choices I have for learning new technology!

    If they would wake up to the idea of working with the Open Source world and removing barriers to their own market they might just make a few bucks huh?

    Now their CPUs, I cannot use those because a Hackintosh has a heavy loading of Intel Technology and not many of the AMD CPUs use all the same technology as Intels products do.
    slickjim
    • Change your Linux distribution

      Where does this idea come from that AMD is against Open Source? SUSE is the only distribution I've tried that lacked support for proprietary AMD/ATI GPU drivers. Have you tried Ubuntu or Mint?

      Hackintosh is a whole different can of worms. I haven't heard of anyone being able to use AMD for such a project. But the problem is as likely to be artifice as much as anything else, just for the purpose of being another barrier to building a cheap(er) Mac clone or Hackintosh.

      Intel compilers used to deliberately handicap AMD CPUs. It's supposed to be illegal now. Since Macs only use Intel, it's a simple matter to put the same kind of kibosh on an AMD CPU. All one need do is look for the CPU ID. Is it "Genuine Intel" or "Authentic AMD?"
      djchandler
  • AMD Overload

    I'll say this...what does AMD build the best? Servers and CPU's. Not video cards, being that the Nvidia is clearly the leader here. Now out of research, Intel is clearly the leader here. If you ask how, take a look at multithreading and power saving. AMD is just now moving into this area. They acquisitioned ATI, changed the brands from ATI to all AMD. Think about what this created for gaming companies who used the ATI GPU technology, Nintendo WII. $250 from the start, should have been $400 for that system to make a profit.

    At one point, AMD lacked the Linux support, so maybe this drop is proper years after the ATI acquisition. I think we should give AMD more time to enhance their APU technology, because this is something that will change the face of multi-GPU computing. Now this is not AMD bashing, but the global markets will show.
    smitheo1
    • What is the problem with Linux?

      How is AMD is lacking Linux support? I've been running Linux on AMD CPUs with ATI graphics for over 6 years. There are lots of open source applications that can take advantage of multi-core CPUs if you know what you're doing. I haven't seen a kernel problem with multi-core support for AMD since I began using multi-core CPUs about 4-5 years ago.

      Certain Linux distributions have limited support for ATI/AMD graphics to be sure, but that is a choice by developers, not the hardware vendors. SUSE in particular has been weak in its support of AMD graphics. But that is not so for Debian, Ubuntu, and their derivatives or Red Hat/Fedora and their derivatives.
      djchandler
  • AMD expected marketing to make up for technological missteps

    Where AMD is having a problems is confusing marketing and being behind Intel technology. Now they are way behind. Not even uninformed consumers are willing to buy their latest products. Salespeople in big box stores have been heavily Intel biased for years, but now they don't have to be. Intel's products are way ahead where it counts for power users and good enough to be acceptable in price and quality for consumers.

    The Bulldozer architecture is not winning power users or gamers due to limited support in Windows 7. AMD APUs are not gaining acceptance quickly enough due to bad and confusing marketing. Also the APUs use a different socket and motherboards than their high-performance CPUs, which limits upgrades and flexibility for hobbyists and small OEM builders.

    Even long-term AMD supporters are deserting AMD now. On top of that they're having trouble getting quality and/or high volume yields from their now out-sourced foundries.

    I've been a loyal AMD customer for over 15 years now, but I see AMD's failure in the not too distant future unless they can find a way into hand-held devices. Their desktop and laptop business is already on the brink of collapse.
    djchandler
  • djchandler

    I am an AMD CPU / Motherboard user for about 10 years and when I get an new set of goodies to replace my 4 year old lot ,it will be AMD again.

    Are you spreading FUD for fun or profit?
    elderlybloke