Chipmaker AMD announced Thursday that earnings and sales for the second quarter of 2001 will fall far below estimates. The company said in a statement that second-quarter net income would be 3 cents to 5 cents a share. Analysts polled by earnings tracking company First Call had forecast an average of 27 cents a share for AMD's fiscal second quarter, with individual estimates ranging from 20 cents to 32 cents. Second-quarter sales will be down approximately 17 percent from first-quarter results of $1.19bn (£810m), the company added. AMD earlier had projected that second-quarter sales would decline by as much as 10 percent. AMD shares plunged in after-hours trading, changing hands at $24 a share on the Island ECN. Ahead of the warning, AMD shares lost $1.12, or 3.8 percent, to close regular trading at $28.64. The company blamed the lower sales and earnings on competitive pressures in the PC market and weak demand for flash memory chips. "First, demand for flash memory devices was and continues to be weaker than anticipated," AMD said in a statement. "Second, competitive pressures in the PC processor market depressed the company's average selling prices." Although prices dropped because of pressure from rival Intel, AMD said it achieved record unit sales of its Athlon and Duron chips. Wit Soundview analyst Scott Randall said that with low demand for PCs and little to distinguish AMD's and Intel's flagship products from each other, the conditions were right for a "Perfect Storm" of price pressure on Intel and AMD. "The only thing Intel has been able to do is respond by lowering prices," Randall said. But Randall said he still hadn't expected such a sharp downturn. "Things are worse sooner than I thought they would be," he said. An AMD representative said the company would not comment beyond the announcement. An Intel representative declined to comment. On 6 June, AMD reiterated that it expected "modest" revenue growth this year. It added that there was reason to believe the PC market was stabilising and would return to normal in the fourth quarter of this year. A day later, Intel said its business was largely on track. "The second quarter is shaping up pretty much as we expected," Intel chief financial officer Andy Bryant said during a midquarter update for analysts. In early May, AMD chief executive Jerry Sanders said at a Merrill Lynch conference that the PC market is "definitely in a recovery" and that sales will improve after the second quarter. In April, the chipmaker topped estimates in its first quarter, with earnings of 37 cents a share on revenue of $1.19bn. However, AMD said at the time that second-quarter sales would be down as much as 10 percent from the first quarter. The news comes amid several recent bright spots for AMD. Longtime Intel champion Dell Computer has signalled that it may be softening its stance against AMD, while Hewlett-Packard and other laptop manufacturers have shown increasing interest in AMD's mobile processors. See Chips Central for the latest on processors and the semiconductor industry. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Chips Central forum Let the editors know what you think in the Mailroom. And read other letters.