AMD Warns on Revenue, Cuts Forecast

by Tom Taulli | October 12, 2012 10:21 am

AMD1 AMD Warns on Revenue, Cuts Forecast[1]It’s been a brutal year for Advanced Micro Devices (NYSE:AMD[2]). Its stock is down about 45% and, unfortunately, a recovery seems far away.

Last night, the company issued a warning[3] for Q3. Revenue is expected to plunge 10% from last quarter to $1.27 billion. The prior forecast was a range of $1.36 billion to $1.44 billion.

Gross margins are also forecast to be about 31%, which is down from an earlier estimate of 44%. And there will be a $100 million charge for inventory.

AMD’s troubles should actually not be a surprise, though. Even large players like Intel (NASDAQ:INTC[4]) are struggling in the PC market because of the continued shift to tablets — a shift that has benefited companies like Apple (NASDAQ:AAPL[5]) and Amazon (NASDAQ:AMZN[6]).

Plus, AMD has been lagging in terms of mobile strategy. And with much fewer resources than rivals like Intel and Qualcomm (NASDAQ:QCOM[7]), there seems to be little hope that the company will be able find a way to get a meaningful piece of the tablet market.

Tom Taulli runs the InvestorPlace blog IPOPlaybook[8], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.[9]”  Follow him on Twitter at @ttaulli[10]. As of this writing, he did not hold a position in any of the aforementioned securities.

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