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AMD sales flatter than a flat pancake

Where have all the customers gone?

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Ouch! AMD has joined the ranks of US tech companies to issue a profit warning. There may be safety in numbers, but AMD has left it a little late - just a few weeks ago the company boasted it was producing and selling record numbers of Athlons. The company says it is still sold out on Athlons, so that means it must be taking a bath on Duron.

For the chip maker now expects Q4 sales to be "flat to nominally higher" than for its record Q3. This is bad news for a company which depends so highly on retail sales which should rise to a crescendo in the run-up to Christmas. Unfortunately retailer buyers in America are resisting the urge to buy PCs in droves.

Not so long ago, AMD reckoned it would ship 8-9 million processors in Q4. Now it will be lucky if it gets above the 6.8 million processors (another record) it shipped in Q3.

This sounds like the company is heading for a big inventory overhang - which will in turn flow through to the brokerage channels and see prices torpedo early next year.

AMD reckons Duron sales will pick up with the introduction of integrated chipsets (meaning cheaper PCs) next year. And Jerry Sanders, AMD's big cheese, reckons the sales slowdown is temporary. "The PC in wired and wireless forms will continue to be the hub of the digital universe," he said in statement. A pretty meaningless statement, really. Until Chimpzilla improves its market share in the business market, it will remain vulnerable to retail fickleness. Digital universe, or no digital universe.

AMD now anticipates Q4 net income will range of 50-60 cents a share, depending on how US consumer demand pans out. Oh, Flash memory, ever boring, ever reliable, continues to sell well. ®

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