Chipmaker Advanced Micro Devices Inc. said its third-quarter revenue likely fell 10 percent from the previous quarter as a weak global economy and growing preference for tablets slams the PC industry.
AMD's pre-announcement is the latest warning about the troubled PC industry. It follows Intel's warning in September that its quarterly revenue would be much lower than expected.
Tablets such as Apple Inc's iPad, once considered a niche market by Intel and others, are fast gaining consumer acceptance and eating into the sales of laptops and desktop computers, while a slowing global economy is dampening spending in general.
Intel's promotion of premium "Ultrabook" laptops has been less successful than the chipmaker expected. PC makers hope Microsoft's launch of its Windows 8 platform later this months will fuel PC sales.
"We already had a sense the PC industry was sluggish versus expectations and hopes for a pickup from Ultrabooks. Some of this is clearly a pause ahead of Windows 8 as well. So all those factors are in place, and of course the uncertainty surrounding PC versus tablets," said Suji De Silva, an analyst at Think Equity.
AMD said third-quarter gross margins would be about 31 percent, less than the 44 percent previously expected, because of lower prices and a write-down of $100 million due lower-than-expected demand for some products.
AMD previously expected its third-quarter revenue to fall 1 percent from the second quarter, plus or minus 3 percent.
AMD shares fell 7.8 percent in after hours trading to $2.95 after closing 1.6 percent higher at $3.20.
© 2013 Thomson/Reuters. All rights reserved.