* Company blames challenging economy
* Stocks slumps after hours
* Warning is latest in PC industry
By Noel Randewich
SAN FRANCISCO, Oct 11 Chipmaker Advanced Micro
Devices Inc said on Thursday its third-quarter revenue
likely fell 10 percent from the previous quarter as a weak
global economy and growing preference for tablets slams the PC
AMD's pre-announcement is the latest warning about the PC
industry. It follows Intel's warning in September that its
quarterly revenue would be much lower than expected.
Tablets such as Apple Inc's iPad, once considered a
niche market by Intel and others, are fast gaining
consumer acceptance and eating into the sales of laptops and
desktop computers, while a slowing global economy is dampening
spending in general.
Intel's promotion of premium "Ultrabook" laptops has been
less successful than the chipmaker expected. PC makers hope
Microsoft's launch of its Windows 8 platform later this month
will fuel PC sales.
"We already had a sense the PC industry was sluggish versus
expectations and hopes for a pickup from Ultrabooks. Some of
this is clearly a pause ahead of Windows 8 as well. So all those
factors are in place, and of course the uncertainty surrounding
PC versus tablets," said Suji De Silva, an analyst at Think
AMD said gross margins in the quarter ending in September
w ould be about 31 percent, less than the 44 percent previously
expected, because of lower prices and a write-down of $100
million due lower-than-expected demand for some products.
Kim Forrest, senior analyst with Fort Pitt Capital Group,
said AMD was hurting more than tech firms that were less exposed
to PCs, but she warned that other "big tech" stocks could face
pressure after AMD's warning.
"I think everybody in tech is going to get tarred with the
bad-performance brush tomorrow," she said.
AMD had previously expected its third-quarter revenue to
fall 1 percent from the second quarter, plus or minus 3 percent.
Analysts, on average, had expected AMD's revenue to fall 2
percent in the third quarter, compared to the prior quarter,
according to Thomson Reuters I/B/E/S.
AMD is due to report its financial results on October 18.
AMD shares fell 7.8 percent after hours to $2.95 after
closing 1.59 percent higher at $3.20.