AMD Updates Fourth-Quarter Guidance

AMD’s success in the mid-range GPU market this year isn’t going to be enough to compensate for the pummeling it’s gotten in the CPU market. That and the ongoing economic recession have prompted AMD to warn Wall Street that its fourth-quarter 2008 prospects are even dimmer than previously thought.

AMD said it expects revenue from ongoing operations to be 25 percent lower than the $1.58 billion the company earned in the third quarter, citing “weakier than expected demand across all geographies and businesses, particularly in the consumer market.”

But if AMD is hoping demand for server CPUs and workstation graphics products will provide a cushion, they’re likely to be disappointed. The market-research firm IDC reported yesterday that factory revenue in the worldwide server market declined 5.2 percent year over year in the third quarter of 2008, the largest quarterly revenue decline since the fourth quarter of 2002 as technology spending slowed around the world. Server unit shipment growth of 2.8 percent year over year in the third quarter represented the slowest increase in server shipments since the fourth quarter of 2006.

On the workstation front, Jon Peddie Research reported yesterday that the workstation and professional graphics markets, while still growing, have lost much of their momentum. The professional graphics market, for instance, grew by just eight percent in the third quarter of 2008, compared to growth of 20 to 30 percent in previous quarters.

AMD isn’t suffering alone. Intel, its biggest competitor, revised its own fourth-quarter guidance on November 12, warning investors that it expected its quarterly revenue to range from $8.97 billion to $9.3 billion, compared to its previous guidance of between $10.1 and $10.9 billion. Intel cited “…significantly weaker than expected demand in all geographies and market segments” for its weaker-than-expected performance.