AMD caught in PC slowdown tide
By Michael Kanellos and Stephen Shankland
Staff Writers, CNET News.com
December 11, 2000, 2:40 p.m. PT
URL: news.cnet.com
just in Following in the footsteps of rival Intel, Advanced Micro Devices warned Monday that fourth-quarter revenue and profit will be lower than expected.
The Sunnyvale, Calif.-based chipmaker, which sells processors for consumer PCs, said net income will be 50 cents to 60 cents a share, lower than the 68 cents a share forecast by analysts polled by First Call/Thomson Financial. Revenue will be flat or nominally higher than the third quarter's $1.2 billion. The company will ship 6.8 million chips this quarter, slightly more than last quarter, AMD said, but lower than the 8 million to 9 million projected.
The expectations could change depending on sales in the last two weeks of the year, the company added. Still, even with the deflated expectations, AMD will likely post a profit this year, the first time the company has managed to accomplish that since 1995.
Like Intel and many PC companies, AMD has been stung by a drop in consumer computer buying. While unusually high in the first part of the year, consumer PC sales began to peak in July.
Since then, a weakening economy, PC saturation and excess inventory have effectively cut down the sales flow of new chips and PCs. Consumer PC sales in October were lower than the same month the year before.
Burning off the inventory bulge could take some time. For PC stocks, "a sustainable rally is unlikely until" the second quarter of 2001, Mark Edelstone, an analyst with Morgan Stanley Dean Witter, wrote in a report today.
"While the slowdown in demand for PCs has been attributed variously to excess channel inventory, a slowing economy, or buyer apathy, we believe it is temporary," said AMD CEO Jerry Sanders. "The PC in wired and wireless forms will continue to be the hub of the digital universe."
Last quarter, Sanders warned that some economic factors could affect AMD during this quarter. A slowdown in corporate buying, he noted then, would likely mean AMD would not be able to get its processors into a corporate computer from one of the top four PC makers until the middle of next year, longer than earlier anticipated |
