Advanced Micro Devices (AMD 1.33%) reported its third-quarter earnings and issued its guidance for its fourth quarter. For the third quarter, AMD reported revenue of $1.43 billion, missing consensus estimates of $1.48 billion, and non-GAAP earnings per share of $0.03, missing consensus estimates by $0.01.

While the above results are more-or-less in line with what AMD expected, the company's guidance for the fourth quarter could be described as "horrific." The company is calling for a drop of 13% from the third quarter, implying revenue of about $1.24 billion. This is a significant miss relative to sell-side consensus, which called for $1.48 billion in revenue.

Interestingly enough, AMD will be taking a restructuring charge -- the company is laying off about 7% of its workforce -- to the tune of $57 million, and plans to lower its fourth-quarter non-GAAP operating expenses to $385 million. This represents a decline from AMD's previously issued quarterly operating expense guidance of $420 million.

With the headline facts out of the way, let's dig deeper into what's actually going on here.

A cringe-worthy core business
AMD recently changed up its reporting structure; now, PC processors and graphics chips are all lumped into one reportable segment. AMD reported that revenue in this operating segment, driven by "lower chipset and GPU sales," was down from $925 million last year to $781 million this year, a 15.5% drop. Further, the newly formed operating segment went from $9 million in operating income this time last year to a loss of $17 million in the most recently reported quarter.

What's happening here is not a new story to anybody following this space: Intel (INTC 1.77%) is likely continuing its share gains in the PC processor market, and it would not come as a surprise if NVIDIA (NVDA 3.71%) were gaining share overall in graphics. Further, given how ferocious and well-capitalized both Intel and NVIDIA are, and how strong their respective product offerings are relative to AMD's, it's not clear how AMD can reverse this trend.

The "growth" businesses look better, but it's a "wait and see"
The second-reportable segment that AMD breaks out is its "Enterprise, Embedded, and Semi-Custom" division. AMD reported revenue growth of 6%, to $648 million for the quarter, and saw operating income here of $108 million. AMD attributed the growth to "higher sales of [its] semi-custom SoCs."

It doesn't seem like the "embedded" and "enterprise" portions of this operating segment are contributing much to revenue, although they may prove to be more important during 2015 and beyond. AMD alleges that the "server" and "embedded" opportunities represent a $17.5 billion total addressable market; it remains to be seen just how much of that opportunity AMD can actually realize.

Indeed, a large total addressable market in no way implies that AMD can actually capture a meaningful portion of it. Intel is known to generate more than $30 billion per year in PC platform sales, and yet AMD continues to lose what small fraction of the market it has.

Foolish bottom line
While the view seems to be that the market "priced in" a bad quarter and/or guidance, it seems to me that the problems that have plagued AMD continue. AMD can lay off engineers and cut its operating expense structure all it likes; but if it can't ultimately stabilize its revenue base and, in the words of AMD's new CEO Dr. Lisa Su, "drive and sustain profitable growth," then AMD is just putting off its eventual demise.