AMD warns of significant dip in Q4 earnings

AMD has issued an earnings warning for the fourth quarter due to lower microprocessor prices

Tumbling microprocessor prices have prompted AMD to warn of a dip in earnings ahead of its fourth-quarter results at the end of the month.

The chipmaker expected fourth-quarter operating income to be positive but substantially lower than in the third quarter, it said last week.

The company, which gave no figure, reported operating income of $US119 million in the third quarter.

AMD attributed the dip in earnings to a sharp drop in prices for PC processors, which largely offset a significant increase in unit sales.

For the fourth quarter, which ended on December 31, AMD expects revenue, excluding its recent acquisition of ATI Technologies, to increase 3 per cent from the $US1.33 billion reported in the third quarter.

Analysts had been expecting AMD to report fourth-quarter revenue of $US1.85 billion and earnings per share of $US0.23, according to Thomson Financial.

AMD, which will report its fourth-quarter results on January 23, has been taking semiconductor market share away from rival, Intel, in the last year with new dual-core processors, forcing Intel into a defensive posture.

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