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AMD Shares Tumble To 10-Year Low

After warning that the soft PC market would result in poor quarterly revenues, AMD's stock today hit a 10-year low.
AMD shares are trading around $3.83, down 28% since yesterday, and analysts are worried that the company may burn through a substantial portion of its $1.1 billion in cash if business doesn't turn around. AMD has been hit by a triple whammy of lower unit sales, revenue and average selling prices. The company expects revenue of about $500 million for Q3 (which ended September 29), off of analysts' forecast of about $614 million in revenue. It said it expects a "substantial operating loss for the quarter". Robert Rivet, AMD's Chief Financial Officer, explained that the shortfall was caused in part by trying to lower its inventory in Q3, which led to lower chip prices. "In the absence of any significant improvement in PC demand in the just completed quarter, we accelerated our efforts to reduce processor inventory in the PC supply chain," Rivet said. "The aggressive actions we took to lower the total inventory and align the mix with current opportunities had a significant negative impact on our third quarter processor sales in units, revenues and [average selling prices]."

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