AMD follows Intel with Q4 profit warning

Just days after Intel Corp. issued a glum fourth-quarter earnings forecast, microprocessor rival Advanced Micro Devices Inc. (AMD) yesterday warned that its financial results for the current three-month period also are likely to be lower than expected because of a slowdown in demand for new PCs.

AMD joins a long list of technology vendors that are suffering from weak year-end PC sales. The Sunnyvale, Calif.-based company said it's now looking for fourth-quarter profits of 50 to 60 cents per share, well off the earlier average prediction of 68 cents per share from financial analysts polled by Boston-based First Call/Thomson Financial.

Intel last week said its financial results will be below expectations for the second straight quarter due to weakening demand for PCs (see story). Gateway Inc. and Apple Computer Inc. also pointed to slower-than-expected PC sales in recent warnings about fourth-quarter profits coming in below planned levels.

AMD, which is due to report its fourth-quarter results in mid-January, said sales for the period are now expected to at best be "nominally higher" than the $1.2 billion it recorded in the third quarter. The company added that fourth-quarter unit shipments of its microprocessors will be only slightly higher than the 6.8 million devices sold in the third quarter, compared with previous expectations that shipments would top the 8 million mark.

Demand is still strong for high-end versions of AMD's Athlon processor running at 1 GHz and above, company officials said. In fact, they added, AMD remains on track to sell out its production of Athlon chips in the fourth quarter. AMD also expressed optimism that demand for its lower-end Duron device will pick up in the first quarter of next year when chip sets with integrated graphics technology become available.

W.J. Sanders III, AMD's chairman and CEO, said in a statement that he doesn't expect demand for PCs to remain depressed for long. "While the slowdown in demand for PCs has been attributed variously to excess channel inventory, a slowing economy or buyer apathy, we believe it is temporary," Sanders said.

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