AMD Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Advanced Micro Devices (NYSE: AMD  ) slumped nearly 17% in early trading today on more than double the average volume. Last night, the semiconductor supplier cut its third-quarter revenue forecast.

So what: Management now expects revenue to grow 4% to 6% in Q3, down from earlier estimates of 8% to 12%. AMD said that issues with manufacturing chips at 32 nanometers via its main supplier, Globalfoundries, cut into supply and thereby reduced its short-term revenue opportunity.

Now what: Interestingly, AMD isn't the only chip supplier to reduce guidance recently. Texas Instruments (NYSE: TXN  ) disappointed analysts in June when Nokia (NYSE: NOK  ) came in light on its orders for TI chips. So while the news from AMD isn't good, it's better to be short on supply than begging for demand. Do you agree? Would you buy AMD's stock at these levels? Please weigh in using the comments box below.

Interested in more info on Advanced Micro Devices? Add it to your watchlist by clicking here.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Texas Instruments. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 29, 2011, at 4:01 PM, austec wrote:

    Hey Tim, you made some great points...

    In my opinion, AMD's biggest challenge is still Intel's now-well-known monopolistic behavior.

    If Intel is still secretly trying to choke off AMD with billion dollar funds - targeted at computer manufacturers, retailers or other critical players in the market, AMD is toast.

    It all depends on how nasty Intel's current bribes and threats are.... Again, maybe Intel has decided to behave legally for once, but based on history, I doubt it.

  • Report this Comment On September 29, 2011, at 4:06 PM, tomprice7 wrote:

    Own AMD currently and intend to buy more at this price

  • Report this Comment On September 29, 2011, at 4:45 PM, mtechac wrote:

    People must be crazy. In a bad economy, a company is doing %4 to %6 and people panic?

    The problem seems with only one chip (llano adn only A8), so what is the deal..!! The new llano does not have a problem and it is coming next quarter.

    Sometimes news can be mis-leading if they are not complete..!!!

  • Report this Comment On September 29, 2011, at 5:09 PM, ramh7 wrote:

    I'm most concern about the engineering level of where things are at and the resignation (due to fraud?) of a main director + the problems of producing that chip.

    That is to me a more serious problem than lowering the expected income and please read here...:

    http://ir.amd.com/phoenix.zhtml?c=74093&p=irol-newsArtic...

    Especially:

    "... Additionally, 45nm supply was less than expected due to complexities related to the use of common tools across both technology nodes. AMD continues to work closely with its key partner GLOBALFOUNDRIES to improve 32nm yield performance in order to satisfy strong demand for AMD products. "

    And even more the further bellow cautionary statement...

    For sure, AMD has ATI VGAs which are wonderful and the new chips looks great, but what is really going on underneath?

    After losing close to 14% on that share, most of them today and due to paralysis... I think the only thing I might do is buy g1-g2*#shares....

    But in the case of VE, it really didn't work :-)

    Best to you all and a happy new year (jewis).

    Rami

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