AMD Issues Q4 Earnings Warning, Shares Tumble in Extended Trading

Yesterday evening AMD issued a brief news release saying excluding ATI-related segments, Q4 (ended Dec. 31) revenue will grow 3% to $1.33 billion. However, operating income (ex-ATI and other charges) is "expected to be positive but substantially lower" compared to Q3 due to "significantly lower microprocessor" ASPs, which "largely offset a significant increase in unit sales." In the pre-market AMD's shares were trading a low as $18.30 on volume approaching 700k for a drop of over 9% versus yesterday's close of $20.18. Analysts at Goldman and Citi have already slashed their target share prices: $19 -> $16 and $26 ->$21, respectively. Bloomberg quotes a ThinkEquity Partners analyst who says, "It's probably an AMD problem more than a market problem. It's going to be tougher and tougher for AMD. They're giving share back to Intel."

• Sources: AMD press release, Bloomberg
• Related commentary: Color on AMD's Warning, AMD Warns On Q4 Operating Income, Key Earnings Reports Over Next Two Weeks: INTC, AAPL, IBM, C, GE, AMD Whacked By Analysts Over Pricing Pressures
• Potentially impacted stocks and ETFs: Advanced Micro Devices (AMD), Intel (INTC). ETFs: Semiconductor HOLDRs (SMH), iShares Goldman Sachs Semiconductor (IGW)

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