Updated from 10:04 a.m. EST

Chipmaker Advanced Micro Devices ( AMD) raised its fourth-quarter revenue forecast, while Gateway ( GTW) said weak demand during the Thanksgiving weekend may dent the personal computer maker's fourth-quarter results.

In early afternoon trading, AMD added 20 cents or 2.6% to $8.05, while Gateway shares plunged 65 cents or 15.8% to $3.47.

AMD said it expects sales of about $700 million for the fourth quarter, up 35% from the third quarter. Its previous forecast was for a 20% increase. The company cited demand for its microprocessors used in PCs and its flash memory products.

While that growth level may sound impressive, it's worth noting that it will take place off a depressed base. AMD's third-quarter results were abysmal, down about a third from last year's levels, as the company struggled through an inventory adjustment.

Though shares have rebounded sharply from their October lows, AMD must contend with continuing market share losses and analyst skepticism on the prospects of its latest family of chips, to debut in 2003. Its debt rating was downgraded further in November.

On the boxmaker front, Gateway CEO Ted Waitt said at an investment conference last night that the company could miss its fourth-quarter earnings target unless sales pick up in December. Under the best-case scenario, the company thinks revenues will come in at the low end of its previous guidance range for fiscal year 2002 of $4.3 billion to $4.5 billion, with a pretax loss of $310 million to $330 million.

"There are a lot of promotions in the market, a lot of very aggressive pricing that's putting pressure on margins," Waitt said in an address at an investors conference in Arizona, according to media reports.

In response to the news, Lehman analyst Dan Niles deepened his estimate of Gateway's 2002 loss from 66 cents to 68 cents, and increased his loss estimate for 2003 from 45 cents to 50 cents. Lehman has no banking relationship with the company.

"We continue to believe that GTW's positioning and high cost structure are problematic and we think there is little relief now that GTW is wedged between two strong competitors," said Niles, referring to Hewlett-Packard ( HPQ) and Dell ( DELL). Gateway's operating expenses consume 23% of revenues versus Dell's 10%, he noted.

Like AMD, Gateway has struggled with market share losses in the downturn. It hasn't turned a profit since 2001 and isn't expected to make money for all of next year. Even after the fierce two-month rally in other tech shares, its stock trades for little more than the cash on its books.

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