Money Matters - Simplified

AMD’s outlook kills share value, officials stumped

AMD's outlook predicts a slump of over 11 percent in its revenue for the second quarter, shares fell by 8 percent soon after the disclosure.

Advanced Micro Devices Inc.(AMD), the international semiconductor tycoon, on Monday announced its viewpoint regarding the revenue processed during the recently concluded second quarter of 2012.

The outlook comes as a shocker for one and all as it has disclosed weaker-than-expected sales of the company in Europe as well as China. And that’s not all; the company report has also talked about a weaker sales environment among the customers which has linearly traumatized the core equipment manufacturing business processes of the company.

Due to its fragile run in China and Europe, the company forecasts a slump of over 11 percent in its revenue for the second quarter, as compared to the first.

However, the detailed report of second quarter will only be released by AMD on Thursday, July 19 after the market closes.

Company shares nosedived in no time
The outlook released by AMD inspired a sharp fall of 8 percent in the company’s shares during after-hours trading; ending up as runner-up to Intel Inc. by a fair margin. In its report, the company also admitted that the slowness of consumer response and spending has directly dented the Original Equipment Manufacturer (OEM) business of the firm.

The fall has stumped AMD
The decrease in revenue comes as a surprise for AMD as it had earlier made predictions of quarter II revenue to increase or decrease within a margin of 3 percent, but a fall of 11 percent is way below expectations and too hard to digest.

For the second quarter of 2012, operating expenses of the company are likely to get better. In its statement, the company claimed that the operating expense will decrease about 8 percent from the guidance of around $605mn, mainly because of strict expense control.

According to expert speculations, the company will post revenue of $1.63bn for the second quarter, topping 2.5 percent from $1.59bn posted by the firm during the quarter that went by.

However, the company is full of hopes that its gross margin for the second quarter will be almost synchronous with prior regulation.