It's AMD's Warning, but the Worry Is Over Intel

Shares of Advanced Micro DevicesAMD slumped after the chipmaker warned that sales would fall 14% short for the quarter ending in June, blaming SARS for weak revenue in Asia. The latest confession raises questions about whether giant rival IntelINTC will manage to emerge from the SARS fallout unscathed, following a host of warnings from other chipmakers that have blamed the epidemic.

In midafternoon trading AMD gave up 43 cents, or 6.5%, to $6.16. Amid broad tech weakness, Intel also traded down 7 cents, or 0.3%, to $20.29.

AMD said this morning that sales are likely to total $615 million, down from its earlier forecast of at least $715 million. Wall Street analysts were looking for revenue of $723 million.

"The anticipated global sales improvement in the month of June did not materialize as we had anticipated," said AMD's CFO Robert Rivet in a statement. "In particular, the decline in personal computer and handset sell-through in China and other Asian markets, largely related to the SARS epidemic, significantly affected AMD's sales in the second quarter."

AMD joins Texas InstrumentsTXN, MotorolaMOT and TriQuintTQNT, which have also cut second quarter expectations. The three all explicitly blamed SARS for their shortfalls.

In April, MicrochipMCHP likewise cited SARS as one reason for a shortfall in the first quarter.

Intel Immunity?

Yet in a striking exception, grandaddy chipmaker Intel so far hasn't acknowledged any SARS-related troubles itself. In its midquarter update June 6, Intel said its microprocessors sales were "trending to the high end" of normal seasonal patterns and maintained the midpoint of its revenue guidance. Intel is scheduled to deliver its financial results July 15.

Given that China is about 12% of Intel's revenue, "I think they'll see an impact," says Woody Calleri, an analyst for Midwest Research, which doesn't do investment banking. "At some point Intel also has to see some weakness from this."

That's not to say it's a certainty, he adds; there's an argument to be made that Intel can dodge the SARS pain because it has a strong customer base among big businesses.