: AMD stock drops as $1 billion shortfall blamed on even weaker-than-expected PC sales

by | Oct 6, 2022 | Stock Market

Advanced Micro Devices Inc. shares fell in the extended session Thursday after the chip maker cut its already conservative forecast because a drop in PC sales after two years of pandemic-driven sales appears worse than feared. AMD
AMD,
-0.13%
shares fell as much as 4% after hours, following a 0.1% decline in the regular session to close at $67.85.

Late Thursday, the company forecast third-quarter revenue of about $5.6 billion with adjusted gross margin of 50%. “The PC market weakened significantly in the quarter,” said Lisa Su, AMD’s chair and chief executive, in a statement. “While our product portfolio remains very strong, macroeconomic conditions drove lower-than-expected PC demand and a significant inventory correction across the PC supply chain.” AMD expects a 40% drop in client sales to about $1 billion, compared with Wall Street’s consensus estimate of $2.04 billion. In early August, AMD held firm on its revenue forecast of $26 billion to $26.6 billion for the year, and forecast third-quarter revenue of $6.5 billion to $6.9 billion, which at the time fell below the Wall Street consensus, and gross margins of 54%. Analysts polled by FactSet currently forecast third-quarter revenue of $6.71 billion, and annual sales of $26.13 billion. AMD is scheduled to report quarterly earnings on Nov. 1. “The gross-margin shortfall to expectations was primarily due to lower revenue driven by lower client processor unit shipments and average selling price,” AMD said. “In addition, the third-quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing and related reserves in the graphics and client businesses.” Last week, after …

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