AMD shares tumble 15.3%
Local chipmaker cites 8% revenue drop, down from forecast of 3% dip.
Chipmaker Advanced Micro Devices saw its shares plummet Tuesday, a day after the company reported that its second-quarter revenue had declined more than it had originally projected.
AMD’s formal headquarters are in Sunnyvale, Calif., but Austin is where most of its senior executives live and much of its engineering is done. The company, one of the world’s largest chipmakers, has about 1,700 employees in Central Texas.
Citing weak consumer demand for personal computers, AMD said its revenue for the second quarter is down about 8 percent from the first quarter of the year. Previously, AMD had projected that sales would fall about 3 percent for the quarter.
AMD, which is scheduled to report full results for the quarter on July 16, saw its shares drop 15.3 percent Tuesday, to close at $2.09. That’s the lowest level for the company’s shares since late 2012.
In an investors note, analyst David Wong of Wells Fargo wrote: “AMD’s shortfall in revenue and margin expecta-
tions for the June quarter and the company’s falling cash levels highlight the high near-term business risk that the company faces.”
“We think it is increasingly likely that AMD may have to look into what its options are to raise cash to offset its continuing losses,” he wrote.
Meanwhile, Cody Acree, an analyst with Ascendiant Capital, wrote that things could’ve been worse for AMD, despite the company’s lower guidance.
“On a modestly positive note, the company looks to have made progress regaining some traction with PC channel sales, which were said to have performed in-line with expectations, working down a portion of last quarter’s excess channel inventory,” Acree wrote.
“Given the overall weakness in global PC activity and Intel’s prior increased competitive aggression in the lowend consumer segment, we count AMD’s relative better channel activity as at least a small victory.”
AMD has long struggled to compete with its muchlarger rival Intel Corp., and its stock has been depressed for years. The company takes in more than $5 billion in annual revenue, but it has posted losses totaling more than $1.6 billion over the past three years, which included a major restructuring in 2012.
The company named a new CEO, Lisa Su, in October.
In June, Reuters news service — citing unnamed industry sources — reported that AMD was considering whether to sell off part of its business or split the company in two. But AMD officials denied that report.