AMD Q2 warning underlines PC market weakness

Revenues at AMD will be worse than it had expected with the weakness in demand for PC technology from the OEM market to blame for the problems

Weaker than expected demand for PCs from the OEM market has been blamed by AMD for a second quarter warning adding more evidence of a reversal of fortunes in the desktop market.

The PC world had bounced back a bit last year thanks to corporate spending along with a pause in the appetite for tablets from consumers.

But already this year things have moved back the other direction and those connected with the market have reported the negative impact of reductions in spending.

Even before its Q2 numbers come out at the end of next week AMD has moved to get in and set expectations with a warning that its revenues would come in down by 8% on the previous year. That figure is worse than the 3% decline that it had prepared investors for with earlier guidance.

The firm pointed the finger at the situation in the OEM side of its business but indicated that it should not mean any change to its channel plans.

"The sequential decrease is primarily due to weaker than expected consumer PC demand impacting the company's Original Equipment Manufacturer (OEM) APU sales. The company expects second quarter channel sales and channel inventory reduction efforts to be in-line with the company's plans," AMD stated.

The vendor has seen a higher mix of sales coming from its enterprise, embedded and semi-custom segment sales but has experienced much lower than expected demand in its computing and graphics segment.

In addition to the warning over revenue the firm also revealed that it is taking a $33m hit as a result of its decision to move from 20 nanometer to the FinFET node.

Shares were suspended for a period on Nasdaq following the Q2 warning but restarted and inevitably given the circumstances saw the value decline by single digits.

More details of just how things have gone in Q2 and what the third quarter is expected to deliver will emerge when the results are released in full next Thursday 16 July.

Sings that things are starting to get difficult in the PC world again have been coming to light as different vendors report results and even before the AMD Q2 warning there had been mixed numbers from memory player Micron, which also blamed the weakened state of the market.

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