SANTA CLARA (dpa-AFX) - Advanced Micro Devices Inc. (AMD) Thursday lowered its revenue outlook for the third quarter, citing weak demand for PCs and notebooks in a 'challenging environment.' Shares of the struggling chip maker slipped seven percent in after-hours trade, following the news.
The Sunnyvale, California-based company now expects third-quarter revenues to decrease about 10 percent sequentially, indicating a revenue of about $1.27 billion. Previously, the company had forecast third-quarter revenues to decrease 1 percent, plus or minus 3 percent, sequentially.
Analysts polled by Thomson Reuters currently expect revenues of $1.38 billion for the third-quarter. Analysts' estimates typically exclude special items.
For the second quarter, the company had reported revenues of $1.41 billion.
AMD's has struggled for the past few quarters as its top line growth is heavily dependent on sales of PCs and notebook. Soft market conditions as well the popularity now resting on tablets and smartphones, which uses chips made by other manufacturers have affected the company. Worsening economic conditions in Europe and Asia have also impacted the company's bottom line.
AMD also lowered its third-quarter gross margin estimate to about 31 percent, from its previous expectation of about 44 percent, hurt by an inventory write-down of around $100 million due to lower anticipated future demand for certain products.
The margin was also impacted by weak demand that lowered the selling prices for the company's computing solutions group products, which includes microprocessors, while manufacturing facilities were not utilized to its full.
On a slightly positive note, the company expects operating costs for the third quarter to decline about 7 percent sequentially after curbing expenses.
Last month, AMD's larger rival Intel Corp. (INTC) had also lowered its revenue outlook for the third quarter, citing weaker than expected demand for chips amidst a challenging environment.
AMD closed Thursday's trading at $3.20, up $0.05 or 1.59%, on the NYSE. The stock, however, lost $0.22 or 6.88% in after hours trading.
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