AMD slashes Q2 revenue guidance, shares slide

Shares of Advanced Micro Devices (AMD) fell as much as 9% in early trading after the chip vendor slashed its second quarter sales outlook, which is now expected to fall 11% from the first quarter. The company originally expected revenue to be flat to up as much as 6% in its prior quarterly forecast.

The difference from the old guidance to the revised guidance issued Monday is $222 million. Its full second-quarter results are due on July 19.

AMD blamed “a weaker consumer buying environment” and “softer-than-expected channel sales” in China and Europe for the decline. Indeed a slowing world economy has affected consumer sales but the magnitude of AMD’s revenue miss is worrying. According to analysts the company is more exposed to a consumer slowdown than rival Intel because a higher percentage of its sales are to consumers.

But the mounting pressure from rivals is playing its part too. On the CPU side AMD has struggled to compete with Intel’s last few processor architectures and instead focused on the value proposition of its chips — they make a good argument but that isn’t scoring them many design wins in the all-important laptop market.

Meanwhile, competition with Nvidia on the GPU front remains as strong as ever, but the later recently gained a significant edge over AMD by securing multiple deals with Apple for the MacBook Pro. Nvidia is also doing way better in the mobile space with its Tegra 3 SoC, which powers a range of tablets and smartphones, including the $199 Google Nexus 7 and the upcoming Surface tablet from Microsoft.

AMD's shares have lost 40% of their value after a year-high in March and are currently trading at $5.05.

Ultrabooks to make up 43 percent of laptop market by 2015

According to research by IHS iSuppli, Ultrabooks will account for 43% of worldwide notebook shipments by 2015, despite the devices only just starting to arrive on the market.

An Ultrabook is defined as being a notebook that is very light and thin, at less than 0.8" thickness. While most contain the fully fledged operating systems of its older sibling, the notebook, they combine the features found more commonly in media tablets, like instant-on activation, always connected wireless links, SSDs and batteries capable of withstanding more than 8 hours usage to a single charge.

"Ultrabooks will represent 43 percent of global notebook PC shipments in 2015, up from 2 percent in 2011 and 13 percent in 2012. Following their first year of shipments in 2011, Ultrabook penetration of the notebook market will increase rapidly, rising to 28 percent in 2013 and to 38 percent in 2014," the market research firm said in a press release on their website.

Manufacturers such as Acer and Asus currently compete against Apple's MacBook Air. But notebooks in general are facing a growing threat with the arrival of tablets. With new Ultrabook designs based on the upcoming Windows 8 operating system and Intel's future processors, the category is expected to become a much more attractive option to current notebooks and should help manufacturers fend off booming tablet sales.

This forecast appears more believable than Intel's prediction that Ultrabooks would take around 40% of the market by 2012. IHS iSuppli's forecast gains even more traction considering Acer and Asus have only recently released new Ultrabooks to the market. Dell isn't likely to launch their version until next year either.

Last week it was reported that Ultrabook sales were failing to meet expectations, with around 100,000 due to be shipped by the year-end -- well short of the 200,000 to 300,000 previously projected.