AMD Warns Of Slowing PC Demand And Slashes Projections

Concern is mounting that users are still not buying new PCs, after Advanced Micro Devices followed Intel by predicting weaker-than-expected sales in the third quarter.

AMD officials on 23 September said they expect sales for the quarter will come in 1 to 4 percentage points lower than the $1.65 billion (£1 billion) the company garnered in the second quarter. During the second-quarter earnings announcement, AMD officials said they expected revenues in the third quarter to rise seasonally.

“The sequential decrease is due to weaker than expected demand, particularly in the consumer notebook market in Western Europe and North America,” AMD said in a statement.

Downgraded Projections

AMD is scheduled to announce third-quarter financial results 14 October.

AMD’s statement comes a month after Intel officials said they were lowering their third-quarter revenue projections, also because of weakening PC sales.

Intel is now expecting revenues for the quarter to come in at $11 billion (£6.9 billion), plus or minus $200 million (£126 million). Officials had earlier estimated revenues at between $11 billion and $12 billion (£7.6 billion).

Other chip makers, including Texas Instruments, also are lowering third-quarter expectations.

Both Intel and AMD saw strong revenues in the first two quarters of the year – Intel reported record sales in the second quarter – and expected the trend to continue, particularly as enterprises began to buy servers and PCs. However, consumers have begun to cut back on PC purchases.

Analyst Concerns

Analyst firms expect PC sales to slow for the rest of the year. Earlier this month, IDC analysts said that because of concerns about the economy and other factors, they were cutting the overall 2010 PC shipment forecast from 19.8 percent to 17 percent over 2009 figures. However, they said the numbers must be kept in perspective.

“Despite reducing growth projections for the year, the outlook for the PC market in the second half of 2010, as well as longer term, remains one of solid double-digit gains,” IDC analyst Loren Loverde said at the time. “Strong demand, aggressive pricing and active product development will continue to fuel solid growth through the next several years.”