AMD said that quarterly revenue would fall well below target, citing weak sales of computers and mobile phones in Asia due to the SARS outbreak.

AMD, whose shares fell to a two-month low following the warning, said it expected second-quarter sales of $615 million, down from an April forecast of $715 million and well below Wall Street estimates.

"The anticipated global sales improvement in the month of June did not materialize as we had anticipated," AMD CFO Robert Rivet said in a statement. "In particular, the decline in personal computer and handset sell-through in China and other Asian markets, largely related to the SARS epidemic, significantly affected AMD's sales in the second quarter," he added.

An AMD spokesman said executives would not comment further and said the company was not giving any guidance on when it might return to profitability. Chip companies are struggling to recover from the industry's worst downturn ever, marked by a lack of corporate spending and an overall economic slide.

The average Wall Street revenue estimate for AMD's second quarter had been $723.4 million, with estimates ranging from $655.8 million to $770 million, according to Reuters Research. AMD's revenue in the year-earlier quarter was $600.3 million. Earlier this month, AMD's largest rival, Intel, narrowed the range of its revenue forecast for the current quarter but left the midpoint of the range unchanged at $6.7 billion.

Pacific Crest Securities analyst Michael McConnell said AMD's problems may reflect the company's sales mix and its position as a leading maker of flash memory chips, a key component of electronic devices including cellular phones.

"They had a lot of leverage in the Asian market, not only on the processor side, but also on the the flash side," he said. "They are going to be more impacted than someone else who has diversified geographic exposure, such as Intel, which also (benefits from) a better product mix to offset that weakness."

By: DocMemory
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