Chipmaker AMD (click ticker for report: ) announced Thursday afternoon that its third quarter results will be substantially worse than expected. Revenues will fall 10% sequentially, compared to prior guidance of -3% to -1% declines, with gross margins coming in substantially lower at approximately 31% compared to a previously-expected gross margin of 44%.
With the PC business struggling mightily and no presence in the mobility market, AMD’s decline has no real end in sight. We’ve previously noted some excitement regarding the firm’s next generation video game technology, but we see no reason establish a position in the name in the portfolio of our Best Ideas Newsletter at this time.
Shares of Intel (click ticker for report: ) have experienced tremendous downward pressure over the past several months, but we think fears about the firm’s mobile presence are overblown. With the stock’s annual dividend yield hovering over 4%, we think shares have a compelling risk/reward profile, and we hold some in the portfolio of our Best Ideas Newsletter.