Today: Citing weaker than expected demand for PCs, Sunnyvale’s Advanced Micro Devices revises its earnings estimates, sending its stock into an after-hours tailspin. Also, Instagram may offer bigger photos, and Apple to revamp packaging in its stores.
The lead: AMD’s decline continues; is it ripe to be bought?
Shares in Advanced Micro Devices plunged in late trading Monday after the Sunnyvale chipmaker announced second-quarter revenue would be lower than expected. After ending the trading day down 2.37 percent, or 6 cents, to $2.47, AMD stock plummeted as much as 15 percent after hours.
AMD now estimates its revenue will drop 8 percent from last quarter, significantly worse than the expected 3 percent, on “weaker than expected consumer PC demand.” Non-GAAP gross margins were also lowered to 28 percent, down from an original 32 percent estimate. AMD is scheduled to announce second-quarter earnings July 16.
The disappointing forecast comes amid rumors that AMD is ripe for a takeover, perhaps by Microsoft. AMD shares have fallen more than 40 percent over the past year, and the company has been losing market share to Intel and Nvidia in recent years. AMD makes graphics chips for Microsoft Xbox One video-game consoles, and says its chips will be perfect for 4K video and virtual reality. With its upcoming HoloLens VR device, the Redmond, Wash., tech giant could see AMD as an economical way to produce chips in-house.
However, as The Motley Fool notes, while AMD’s console-game chips are selling well, they’re not enough to offset steep losses in its other businesses, especially enterprise. “It’s impractical for Microsoft to inherit all those problems just to cut the cost of the Xbox One or gain an early edge in the fledgling AR/VR markets,” he Fool’s Leo Sun wrote
AMD’s tumble did not appear to seriously affect other Silicon Valley chipmakers’ stocks; While Intel, Nvidia and Marvell all slid more than 1 percent in regular trading, none suffered significant after-hours drops.
SV150 market report: Bigger photos in Instagram, sleeker boxes in Apple Stores
The major stock indexes were down slightly Monday, as the world awaited for the next move after Greek voters rejected a bailout plan Sunday.
Facebook shares rose 0.3 percent, or 26 cents, to $87.55, as it appeared its Instagram service will soon be able to upload higher-resolution images.
Apple fell 0.35 percent, or 4 cents, to $126, as the Cupertino tech giant will reportedly revamp the look of packaging in its stores. 9to5Mac reported the company has been working with third-party accessory makers to redesign box covers to more closely match Apple packaging.
Google dropped 0.31 percent, or $1.72, to $545.62, as its Waze driving-navigation service began a carpooling pilot program in Israel.
VMware sank 2.51 percent, or $2.14, to $83.03, after FBR lowered the Palo Alto virtualization software company’s price target from $96 to $90, based on increased competition from Microsoft and IBM.
San Jose solar-panel maker SunPower fell 2.4 percent, or 66 cents, to $26.83, and has now dropped more than 12 percent in the past month.
Silicon Valley tech stocks
Up: Gilead, Netflix, Facebook, LinkedIn
Down: Apple, Google, Oracle, Intel, Cisco, HP, eBay, Yahoo, Tesla
The SV150 index of Silicon Valley’s biggest companies: Down 11.93, or 0.63 percent, to 1,879.30.
The tech-heavy Nasdaq composite index: Down 17.27, or 0.34 percent, to 4,991.94.
The blue chip Dow Jones industrial average: Down 46.53, or 0.26 percent, to 17,683.58.
And the widely watched Standard & Poor’s 500 index: Down 8.02, or 0.39 percent, to 2,068,76.
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