AMD share price hit by revenue warning

July 7, 2015 // 11:31 a.m.

Tags: #10nm #20nm #amd #apu #financial #finfet

AMD has warned that its second-quarter revenue is going to be lower than expected, beating even its lowest performance estimates due to poor sales of its accelerated processing unit (APU) product lines.

In a statement issued to investors and press late yesterday, AMD warned that its revenue for the second quarter of its financial year - which ended on the 27th of June - will be eight per cent lower than the prior quarter, a drop which exceeds the company's worst-case forecast of three per cent plus or minus three per cent (in other words, a worst-case six per cent drop). As the warning was issued, AMD's shares were temporarily halted on the Nasdaq stock exchange.

In the statement, AMD blamed the worse than expected performance on 'weaker than expected consumer PC demand impacting the company's Original Equipment Manufacturer (OEM) APU sales.' The same issue is also blamed for an expected 28 per cent non-GAAP (generally accepted accounting principles) gross margin, a major drop from the projected 32 per cent, due to the revenue being made of up a larger proportion of low-margin enterprise, embedded, and semi-custom parts compared to the company's higher-margin computing and graphics products.

If that all weren't bad news enough for the company and its investors, AMD has also warned that its second-quarter results - due to be released on the 17th of July - will also include a one-time charge of $33 million as the company transitions from the 20nm planar node to FinFET technology. 'The company started several product designs in 20 nm that will instead transition to the leading-edge FinFET node,' its statement read, with the timing appearing to relate to an announcement from Taiwan Semiconductor (TSMC) that it had begin prototyping a 10nm FinFET-based process.

Once its share halt had expired, AMD's stock price took a serious tumble on the news: its closing price of $2.47 has plummeted 12.96 per cent in pre-market trading to $2.15, its lowest since the 16th of November 2012 when it was trading at $1.86.
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