AMD Announces Preliminary Q3 results: revenue expected to decrease ~10%
Ahead of their Q3 results report due next week (10/18), AMD have announced new expectations for revenue:
Source - AMD Press Release
Despite controlling Q3 expenses and reducing operating expenses by 7%, AMD is expecting gross margin for the quarter to be ~31% instead of 44%. The reason given for this is an inventory write-down value at ~$100M. The write down is stated by because of lower future anticipated demand for certain products; something isn't selling and AMD are getting rid of it.
Additionally, lower than expected demand for products from the Computing Solutions Group - i.e. everything that's not in the Graphics Products Group - resulted in reduced ASP, meaning less money coming in for CPU and associated products like chipsets. Overall, AMD claim lower than expected demand caused by the 'challenging macroeconomic' environment is the cause of reduced revenue, too.
It's easy to point the finger at Intel's Ivy Bridge processors and say the performance comparison there is the failure, which may be true for the cancelled order - first generation A-series APU's, perhaps? With Q4 heralding the launch of the second generation A-series desktop APU's, plus the promise of next generation FX, perhaps Q4 will be better?
AMD stock dropped 6% in after hours trading following the announcement.
AMD today announced that revenue for the third quarter ended September 29, 2012 is expected to decrease approximately 10 percent sequentially. The company previously forecasted third quarter 2012 revenue to decrease 1 percent, plus or minus 3 percent, sequentially. The lower than anticipated preliminary revenue results are primarily due to weaker than expected demand across all product lines caused by the challenging macroeconomic environment.
The company now expects third quarter gross margin to be approximately 31 percent; less than the previous expectation of approximately 44 percent primarily due to an inventory write-down of approximately $100 million due to lower anticipated future demand for certain products. Third quarter gross margin was also negatively impacted by weaker than expected demand, which contributed to lower than anticipated average selling prices (ASPs) for the company's Computing Solutions Group products and lower than expected utilization of its back-end manufacturing facilities.
Operating expenses for the third quarter are expected to decline approximately 7 percent sequentially as a result of tightly controlled expenses in the quarter.
AMD will report third quarter 2012 results after market close on Thursday, October 18, 2012.
Source - AMD Press Release
Despite controlling Q3 expenses and reducing operating expenses by 7%, AMD is expecting gross margin for the quarter to be ~31% instead of 44%. The reason given for this is an inventory write-down value at ~$100M. The write down is stated by because of lower future anticipated demand for certain products; something isn't selling and AMD are getting rid of it.
Additionally, lower than expected demand for products from the Computing Solutions Group - i.e. everything that's not in the Graphics Products Group - resulted in reduced ASP, meaning less money coming in for CPU and associated products like chipsets. Overall, AMD claim lower than expected demand caused by the 'challenging macroeconomic' environment is the cause of reduced revenue, too.
It's easy to point the finger at Intel's Ivy Bridge processors and say the performance comparison there is the failure, which may be true for the cancelled order - first generation A-series APU's, perhaps? With Q4 heralding the launch of the second generation A-series desktop APU's, plus the promise of next generation FX, perhaps Q4 will be better?
AMD stock dropped 6% in after hours trading following the announcement.
Comment