AMD's flash business appears to have spoiled an otherwise decent fourth quarter.

AMD late Monday warned that its flash memory unit will likely show a loss when the company reports its fourth quarter results on Jan. 18 due to slow sales. In a previous forecast, AMD said it expected memory sales to be either flat or up during the quarter. Investors recoiled at the warning, sending AMD's shares down almost 8 per cent to $18.55 in after-hours trading - at the time of this report.

Overall, AMD expects to report sales for the fourth quarter that are slightly higher than the $1.24bn in sales it posted in the third quarter. AMD should still report a profit, but it's income will be "down significantly" from the third quarter's $68.4m.

Processor sales continue to impress and will likely be higher than third quarter sales, AMD said. The company's processor business should post a profit.

AMD's downward guidance likely means that rival Intel gained ground in the flash memory market and applied significant pricing pressure. ®

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