AMD Sees Revenue Sliding -- Update

By Josh Beckerman 

Advanced Micro Devices Inc. said it expects second-quarter revenue will be lower than its previous guidance, citing weak consumer PC demand.

The semiconductor company expects a sequential revenue decline of about 8%, compared with prior guidance of a 3% decline, plus or minus 3%.

In after-hours trading, AMD shares were down 12% to $2.18.

The money-losing semiconductor maker has been shifting its focus recently, saying it would lose money through the first half of the year but return to profitability in the second half as it attempts to grab greater market share in select businesses where it believes it can make a profit.

Sunnyvale, Calif.-based AMD is the longtime second-fiddle in microprocessors to Intel Corp. The two companies use the same fundamental design, known as x86, that powers nearly all PCs.

In April, AMD said its first-quarter loss widened as its revenue slumped, to $1.03 billion, and the company said it would exit its defense-server systems business.

AMD also said Monday that gross margin will be lower than expected, in part due to a higher mix of Enterprise, Embedded and Semi-Custom segment sales.

Chief Executive Lisa Su initiated cost-cutting moves shortly after she took the company's helm in October. Early this year, Ms. Su recruited several new senior managers while moving to retain others.

AMD has managed to place chips in the latest game consoles from Sony Corp. and Microsoft Corp. But its market share has dwindled in chips for PCs and server systems.

Analysts polled by Thomson Reuters project a loss of 10 cents a share for the quarter. AMD's revenue forecast issued in April was below analysts' estimates of $1.13 billion at the time.

Write to Josh Beckerman at [e-mail]

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