Fitch lowers AMD

Fitch Ratings said it downgraded Advanced Micro Devices Inc.'s long-term issuer default rating to CCC from B and senior unsecured debt to CCC with a recovery rating of RR4 from B with a recovery rating of RR4.

The ratings reflect expectations that negative free cash flow in 2013 will drive cash below Advanced Micro Device's target level and potentially approach the company's minimum operating level, Fitch said.

Beyond the near-term, the agency said it believes a strong end-market recovery and adoption of the company's new products will be required to preserve cash during the company's multi-year transformation, the agency said.

Fitch said it expects negative revenue growth in the mid- to high-teens for 2013, driven by weak consumer spending, robust tablet penetration and lingering excess channel inventory anticipated for the first half of the year.

Negative revenue growth will drive profitability lower in 2013, despite restructuring actions expected to reduce quarterly operating expenses to $450 million by the September 2013 quarter, the agency said.

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