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AMD warns on revenue: Trouble ahead for PC makers?

Advanced Micro Devices warns of a worse-than-expected revenue decline. That compares to an earlier forecast that called for a revenue increase.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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Brooke Crothers

Advanced Micro Devices said today that revenue for the quarter ending June 30 is expected to be off 11 percent sequentially.

That's a very different outlook from what AMD forecast previously when it said that second-quarter 2012 revenue was expected to increase 3 percent sequentially, plus or minus 3 percent.

"The lower preliminary revenue results are primarily due to business conditions that materialized late in the second quarter, specifically softer-than-expected channel sales in China and Europe," the company said.

But AMD also attributed the worse-than-expected result to "a weaker consumer buying environment impacting the company's Original Equipment Manufacturer [OEM] business."

That last statement is potentially the scariest of the reasons put forward. That could either mean AMD processors are not faring well in PCs or the consumer market in general for PCs is stagnating in the face of the demand for tablets -- where AMD has virtually no presence at the moment.

And weak demand in general could pose problems for chip giant Intel too as well as its customers -- companies like Hewlett-Packard, Dell, Acer, and Asus.

"Although we had previewed a miss from AMD, the magnitude exceeded our expectations, reflecting a combination of weak PC market conditions and a degree of share loss to Intel," said Glen Yeung of Citibank in a research note.

Yeung did add this, however: "While discouraging, we suspect 2Q12 marks the worst quarter of the year, exacerbated by the impact of Intel's Ivy Bridge launch (we do not expect a pre-announcement from Intel)."