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. AMD said that the lower than anticipated preliminary revenue results were 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.
AMD expects operating expenses for the third quarter to decline approximately 7 percent sequentially as a result of tightly controlled expenses in the quarter.
AMD said it was also affected by lower selling prices for its chips and poor utilization of its manufacturing facilities.
The write-off could be tied to its "Llano" Fusion chips, which started appearing in PCs in the middle of last year. AMD had supply and manufacturing issues with Llano and demand for the chip was poor. The company is doing better with a successor to Llano code-named Trinity, which became available in laptops and PCs in May.
AMD hopes that it could benefit from Microsoft's launch of Windows 8, which will ship in PCs starting the end of this month.
The company will report third quarter 2012 results after market close on Thursday, October 18, 2012.