Chipmaker Advanced Micro Devices' quarterly revenue forecast fell short of expectations and its CEO warned of more choppiness in the PC market as smartphones and tablets gain additional traction with consumers.
Like larger rival Intel, AMD is trying to refocus its business as sales of laptops languish and consumers increasingly depend on more mobile gadgets.
The Sunnyvale, California, company's December-quarter results topped expectations on Tuesday but its revenue forecast for the March quarter was gloomier than top PC chipmaker Intel's outlook last week.
AMD estimated revenue in the current first quarter would fall 9 percent from the fourth quarter, plus or minus 3 percentage points.
Last Thursday, Intel said revenue for its March quarter would fall about 6 percent from the prior quarter and disappointed Wall Street with a sharp increase in capital spending.
"They (AMD) guided down 9 percent at midpoint, compared to Intel down 6 percent. That really reflects a weaker competitive position out there," said Evercore Partners analyst Patrick Wang.
Microsoft Corp's long-awaited launch of Windows 8 in October brought touch-screen features to laptops but failed to spark a resurgence in sales that AMD, Intel and many PC manufacturers had hoped for.
AMD Chief Executive Officer Rory Read told analysts on a conference call that he expects more choppiness in the PC market in the first half of 2013.
On the call, Read focused on AMD's previously announced plan to diversify into new markets and said that measures to cut costs were on track.
AMD posted fourth-quarter revenue of $1.16 billion, compared with $1.69 billion in the year-ago quarter. The mid-point of AMD's revenue forecast for the March quarter is about $1.056 billion.
Analysts had expected $1.149 billion in revenue for the December quarter and $1.108 billion in revenue for the current quarter, according to Thomson Reuters I/B/E/S.
AMD and Intel were both caught flat-footed in recent years with the emergence and fast growth of mobile devices, which led to an unexpected slump in the PC industry.
While Intel has deep pockets to fund research on new processors to catch up in tablets and smartphones, AMD faces declining cash flows and a more modest balance sheet.
One of Silicon Valley's oldest chipmakers, AMD is trying to find new markets for its chip technology, including communications, microservers, digital signs and stripped down "thin client" computers.
It recently hired two senior engineers with experience at Qualcomm Inc and Apple Inc, its latest high-level recruitments, as it looks for new business opportunities.