AMD lowers third-quarter revenue forecast

Shares drop, then rise after chip maker warns of softer demand for notebooks

Citing weaker than expected demand, "particularly in the consumer-notebook market in Western Europe and North America,” chip maker Advanced Micro Devices Inc. on Thursday warned that third-quarter revenue would fall below second-quarter sales of $1.65 billion by 1 percent to 4 percent. Analysts had been predicting revenue of $1.72 billion for the company in Q3.

The revised forecast pushed down AMD (NYSE: AMD) shares early in after-hours trading, to 6.26 from Thursday's close of 6.40. By 8 p.m., though, AMD had climbed to 6.46. The company is due to report Q3 earnings on Oct. 14.

Advanced Micro Devices is the second major tech company to take a hit on Wall Street this week for disappointing revenue forecasts. Adobe Systems' shares plunged 20 percent Wednesday after the software maker warned that Q4 sales would fall short of consensus estimates, and dropped another 1 percent in Thursday's trading.

Also, on Aug. 27 chip market leader Intel reduced its Q3 revenue projections. Like AMD, Intel cited "weaker than expected demand" for consumer PCs in mature markets. Intel shares, however, actually gained slightly the day the revised revenue forecast was issued.

A Morgan Stanley report issued last week painted a grim picture for notebook sales, showing a 4 percent decline in August for year-over-year sales, with similar negative growth expected this month.

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