Advanced Micro Devices Cuts Q3 Outlook; Shares Plunge in After-Hours Trading (AMD)

Advanced Micro Devices Inc. (NYSE: AMD) shares have plunged in after-hours trading today after the semiconductor company lowered its outlook for the third quarter.

Advanced Micro Devices shares fell 8.46% to $5.63 in after-hours trading today. Earlier, the stock had ended 5.24% lower at $6.15 in regular trading.

After market close today, Sunnyvale, California-based Advanced Micro Devices lowered its revenue and profit outlook for the third quarter due to manufacturing problems. This is not the kind of start CEO Rory Read was hoping after joining the company last month. However, the company did not blame the weak PC markets for the downward revision.

AMD said that it is facing manufacturing problems at its facility in Germany, which is operated by GlobalFoundries. AMD had spun off GlobalFoundries back in 2009 so that it could focus more on chip design. The company said that the manufacturing issues at the German facility resulted in fewer newest chips to sell.

AMD said that it expects third-quarter revenue to rise between 4% and 6% on a sequential basis. This translates to revenue of $1.63-$1.67 billion. The company’s previous forecast for third-quarter revenue was of $1.70-$1.76 billion. Analysts expect the company to report third-quarter revenue of $1.72 billion.

The company expects third-quarter gross margin to come in between 44% and 45%. The company’s previous forecast was 47%.

AMD, meanwhile, is hoping that Fusion chips will boost its revenue in the future. The Fusion chips combine general purpose computing with more specialized graphics processing. The success of Fusion chips is crucial for AMD as it will help the company in justifying the $5.6 billion acquisition of ATI Technologies back in 2006. The ATI acquisition provided the company with graphic capabilities, which have been used in Fusion chips.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.