AMD warns investors of billions in lost revenue • The Register

AMD has warned investors that it beat its quarterly revenue guidance by $1.1 billion.

The Ryzen processor designer won’t release its Q3 results until November 1, but has still decided to give Wall Street a taste of its numbers — a move companies rarely take unless they have bad ones To release news or feel investors need to know about it, trading conditions need to change sooner rather than later.

Today’s announcement mixes good and bad news.

The headline is that AMD now forecasts third-quarter revenue of $5.6 billion, down from the previously forecast $6.7 billion (plus or minus $200 million). That’s a 16 percent drop in projected sales.

The business blamed its problems on the people who didn’t buy enough PCs, and therefore the processors for those machines.

“The PC market weakened significantly in the quarter,” said AMD CEO Dr. Lisa Su in a canned quote. “While our product portfolio remains very strong, macroeconomic conditions resulted in lower than expected PC demand and a significant inventory correction across the PC supply chain.”

Su isn’t the only one seeing a slowdown in PCs: IDC saw the market decline 15.3 percent year over year in the second quarter, and rival analysts Gartner saw a 12.6 percent decline over the same period.

Both analyst firms attributed the slump in sales to a combination of economic uncertainty and rising inflation, and buyers had stocked up on all the gear they need to weather the pandemic-driven shift to working from home.

The good news we mentioned above is that despite the slump in PC sales causing a $1 billion revenue dip, AMD’s revised guidance still shows a 29 percent year-over-year revenue increase for the third quarter .

Data center, gaming, and embedded products delivered this result, with all reports “up significantly year-over-year, in line with the company’s expectations.”

Su said he was “pleased with the performance of our Data Center, Embedded and Gaming segments and the strength of our diversified business model and balance sheet,” and said AMD “remains[s] We are focused on executing our roadmap for leading products and look forward to bringing our next-generation 5nm data center and graphics products to market later this quarter.”

The chief executive didn’t address AMD’s margins, which have fallen along with PC sales.

The non-GAAP gross margin guidance of 54 percent was reduced to “approximately 50 percent,” with an approximately $160 million charge primarily related to “inventory, pricing and related reserves in the graphics and customer businesses” impacting numbers .

AMD’s warning is another sign that global economic conditions, driven largely by disease, inflation and war, are softening.

Enjoy your weekend, dear reader. If you can. ® AMD warns investors of billions in lost revenue • The Register

Rick Schindler

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