NEW YORK ( TheStreet) -- Intel's ( INTC) decision to lower its revenue forecast hammered the tech giant's stock on Monday and fuelled speculation that rival Advanced Micro Devices ( AMD) will follow suit. Number 1 chip maker Intel blamed the guidance change on a hard disk drive shortage. Analysts warned that AMD could also feel the burn.
"This could impact AMD a bit more than Intel because of not only desktop exposure, but because of
non-brand name white box hardware as well," explained Patrick Wang of Evercore Partners. "AMD has made a living selling to cost-sensitive customers." He said that AMD may have to cut its guidance in the next week or two, with disk drive shortages expected to be around for much of 2012. The most severe impact will be in the first quarter, explained the analyst, although this will lessen in the second and third quarters.
Intel expects fourth quarter revenues to be between $13.4 billion and $14 billion, according to a statement released on Monday, lower than its original forecast of $14.2 billion to $15.2 billion. Shares were off almost 5% by mid-afternoon on Monday. AMD shares mirrored Intel's performance, dipping 26 cents, or 4.69%, to reach $5.28. Analyst Cody Acree of Williams Financial Group agrees that AMD will feel pressure, but may not necessarily suffer more than Intel. "It's impactful to the industry", Acree said, of the Thailand floods. "An OEM (original equipment manufacturer) isn't going to change
chip provider based on microprocessors, so AMD is going to be feeling some pressure." Acree noted that AMD's largest customers are HP ( HPQ) and Lenovo, and cited recent chip designs that have improved its market share. The analyst has a Buy rating and a $13 price target on AMD. Evercore's Wang, in contrast, rates AMD shares Equal-Weight and has a $6 price target on the chip specialist.
Andy Ng of Morningstar, however, said that the Thailand floods may not wind up affecting AMD much at all, given the company's capacity constraints. With AMD's GlobalFoundries partner having trouble ramping up production of its Llano chip, explained the analyst, falling near-term demand might not affect AMD. GlobalFoundries is the world's third largest factory where devices such as integrated circuits are made. "AMD is having trouble getting manufacturing yields up, which should be resolved in the next few quarters," said Ng. "It is possible that the move lower today is an over-reaction given the supply constraints." The analyst also said that he expects AMD to gain market share from Intel in notebook chips because the production issues are coming in desktop computers, not notebooks. As GlobalFoundries improves its manufacturing yields, Ng thinks that AMD will benefit. He thinks shares could hit $11 over "the next couple of years." -- Written by Chris Ciaccia in New York >To follow the writer on Twitter, go to http://twitter.com/commodity_bull. >To submit a news tip, send an email to: firstname.lastname@example.org