SiliconBeat – AMD shares plummet on gloomy forecast

Advanced Micro Devices officials are dropping the chip maker’s second-quarter revenue projections due to slowing demand for consumer PCs.

Analysts polled by Thomson Reuters now expect the company to post second-quarter sales of $999.55 million, implying a sequential decline of about 3 percent.

Consistent with data points from our Computex meetings in June and from across the PC supply chain, AMD lowered second quarter revenue guidance to (-8%) quarter over quarter versus (-3%) citing weakness in PC OEM sales. The shortfall was blamed on weak PC sales, along with a one-time charge for pushing more of its chip production to newer manufacturing technologies. AMD believes that its second quarter channel sales and channel inventory reduction efforts will be in-line with its plans. Furthermore, AMD has also decreased its estimate for the adjusted gross margin from 32% to 28%, as the weak PC market continues to affect the demand for its APU (Accelerated Processing Unit) chips.

AMD has announced that it will be transitioning all of its 20nm chip designs to FinFET in its updated financial guidance statement published yesterday. (NASDAQ: INTC) and Nvidia Corp.

Horizon Pharma Plc (HZNP) slumped 2.6% or 89 cents to $33.65 after the Ireland-based biopharmaceutical company propose to acquire Depomed, Inc. for $29.25 per share in an all-stock, tax-free exchange valued at about $3 billion, a premium of 42% to the closing price of July 6.

Cash and cash equivalents at the end of the second quarter are expected to be approximately $830 million, in line with expectations. Risks include that Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit AMD’s ability to compete effectively; that AMD relies on GlobalFoundries Inc. The average 12-month price target for AMD is $2.85, marking a 35.71% potential upside from where stock is now trading. They now have a $2.50 target on firm.

AMD dropped as much as 15 percent in extended trading following the announcement. That would below the $968 million to $1.03 billion range the company had previously expected. The stock has a 50-day moving average of $2.37 and a 200-day moving average of $2.61. No details about the new device have been disclosed, however Droid Life reports that the device has Wi-Fi, Bluetooth, and a battery you can not change. 9to5Mac reported the company has been working with third-party accessory makers to redesign box covers to more closely match Apple packaging.