Advanced Micro Devices Inc. quarterly revenue forecast fell short of expectations and its CEO warned of more choppiness in the PC market as smartphones and tablets gain additional traction with consumers.
Like larger rival Intel Corp., the maker of semiconductor chips is trying to refocus its business as sales of laptops languish and consumers increasingly depend on more mobile gadgets.
The Sunnyvale, Calif., company's December-quarter results topped expectations on Tuesday but its revenue forecast for the March quarter was gloomier than top PC chip maker Intel's outlook last week.
AMD estimated revenue in the current first quarter would fall 9 per cent from the fourth quarter, plus or minus 3 percentage points.
Last Thursday, Intel said revenue for its March quarter would fall about 6 per cent from the prior quarter and disappointed Wall Street with a sharp increase in capital spending.
"[AMD] guided down 9 per cent at midpoint, compared to Intel down 6 per cent. That really reflects a weaker competitive position out there," said Evercore Partners analyst Patrick Wang.
Microsoft Corp.'s long-awaited launch of Windows 8 in October brought touch-screen features to laptops but failed to spark a resurgence in sales that AMD, Intel and many PC manufacturers had hoped for.
AMD chief executive officer Rory Read told analysts on a conference call that he expects more choppiness in the PC market in the first half of 2013.
On the call, Mr. Read focused on AMD's previously announced plan to diversify into new markets and said that measures to cut costs were on track.
AMD posted fourth-quarter revenue of $1.16-billion, compared with $1.69-billion in the year-ago quarter. The mid-point of AMD's revenue forecast for the March quarter is about $1.056-billion.
Analysts had expected $1.149-billion in revenue for the December quarter and $1.108-billion in revenue for the current quarter, according to Thomson Reuters I/B/E/S.
AMD and Intel were both caught flat-footed in recent years with the emergence and fast growth of mobile devices, which led to an unexpected slump in the PC industry.
While Intel has deep pockets to fund research on new processors to catch up in tablets and smartphones, AMD faces declining cash flows and a more modest balance sheet.
One of Silicon Valley's oldest chip makers, AMD is trying to find new markets for its chip technology, including communications, microservers, digital signs and stripped-down "thin client" computers.
It recently hired two senior engineers with experience at Qualcomm Inc. and Apple Inc., its latest high-level recruitments, as it looks for new business opportunities.
AMD had a net loss of $473-million, or 63 cents a share, compared with a net loss of $177-million, or 24 cents a share, in the same quarter the previous year.
Its adjusted loss per share was 14 cents, beating expectations for a 20-cent loss.
Shares of AMD rose 1.22 per cent in extended trade after closing down 0.41 per cent at $2.45.