AMD Sinks After Early Peek at Revenue Shows Steep Shortfall

(Bloomberg) – Advanced Micro Devices Inc. missed sales estimates by more than $ 1 billion early in the third quarter, fueled by concerns about a slow market for personal computer chips and a slump in its shares. at the end of the session.

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Revenue for the period was approximately $ 5.6 billion, the company said in a statement Thursday, taking a first look at the numbers expected in the coming weeks. The analyst’s average estimate – and the company’s forecast – was about $ 6.7 billion.

Like its peers, AMD blamed the PC market for hurting sales, citing weak demand and inventory build-up in the supply chain. The company said the third quarter will also include $ 160 million in write-downs related to inventory, pricing, and other issues.

AMD is the latest PC company to warn investors that its product market is booming. Nvidia Corp and Intel Corp have already slashed their estimates by billions, saying they need to burn inventory of unused parts.

As AMD gains market share at Intel’s expense, the company is not immune to a drop in PC demand. Consumers who spend on technology during the pandemic halt are now cutting back on expensive electronic devices as they face recession and inflation fears.

“While our product pipeline remains very strong, macro conditions are fueled by weaker-than-expected PC demand and significant inventory improvement,” CEO Lisa Su said in the statement.

The stock fell nearly 4% to $ 65.10 in extended trading. Even before the decline, shares were down 53% this year, part of a broader pullback for the chip industry. Other semiconductor manufacturers, including Nvidia and Intel, also fell after AMD’s report.

AMD plans to release full third quarter results on November 1, followed by a conference call to discuss the results. The company said it does not plan to provide any further financial updates before then.

Reflecting its relatively strong performance versus Intel, AMD said its gross margin – the percentage of sales remaining after cost reduction – would be around 50% for the quarter. This is down from previous projections, but is broader than Intel’s once-industry-leading profitability levels.

(Updated with revised margin forecast in the last paragraph.)

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