AMD gives us a Tech reality check

If you are paying too much attention to the blogger code of ethics debate, then you are missing what could turn out to be technology industry’s very own blizzard of 2007. The demand for devices – from PCs to wireless phones to everything is heading south – fast. And it could chill the technology industry for at least first half of the year.

Earlier today, Advanced Micro Devices (AMD) announced that it is cutting its revenue forecasts, for the first quarter of 2007. “Revenues declined sharply quarter-over-quarter … due to lower overall average selling prices and significantly lower unit sales, especially in the resale channel,” AMD said. AMD will cut costs, and slowdown hiring. AMD pre- announcement can’t be dismissed lightly. You can expect more companies will make such statements during this earning season, underscoring lack of demand.

According to Cowen & Company chief technology strategist Arnie Berman, the demand has been lagging in most high-end volume markets – PC’s, wireless handsets and most categories of consumer electronics. The corporate spending is also proving to be sub-par.

What about the start-ups? How are they impacted? Our good buddy Pip Coburn of Coburn Ventures emailed us a few minutes ago, and said, “None of this is surprising and I don’t think start ups would be surprised or frankly care at all.”

Erring on the side of caution, I think the  web-based companies, especially those reliant on advertising – that everyone from Yahoo and as small as our lowly site, could feel the impact of this demand slowdown. The retail chains like Best Buy and Circuit City could be impacted as well. The good news is that this is market self correcting itself, and instead of a Bust 2.0, we might have a slow correction in the technology ecosystem.