UPDATE 2-AMD sees fourth-quarter revenue shortfall

SAN FRANCISCO, Dec 4 (Reuters) - Chipmaker Advanced Micro Devices (AMD.N) on Thursday warned fourth-quarter revenue would be much weaker than expected due to widespread weakness, and particularly among consumers.

But shares recovered much of an 8 percent, premarket drop as investors and analysts, by now accustomed to the steady drum beat of bad technology news, seemed unfazed by the warning.

Cody Acree, an analyst with Stifel Nicolaus, said the market was not surprised given the state of the PC industry, which is being crippled by poor demand. AMD and chief rival Intel (INTC.O), the world's largest chipmaker, make virtually all the microprocessors for the world's 1 billion PCs.

Acree said AMD has done a solid job of making itself more competitive with Intel. "I think this has nothing to do with AMD individually, this is fully macro," Acree said.

AMD said it now expects revenue from continuing operations for the period ending Dec. 27 to decline around 25 percent from the third-quarter to roughly $1.19 billion.

The average analyst revenue estimate for the fourth-quarter is $1.52 billion, according to Reuters Estimates.

AMD previously forecast fourth-quarter revenue to be flat when compared with the third quarter.

In addition, at an analysts' meeting gathering in November, AMD stood by its financial forecast, even after Intel slashed its fourth-quarter outlook. Earlier in the month, the company slashed 500 jobs from its staff of 15,500 in a cost-cutting move.

MORE WORRIES ABOUT CHIPS  Continued...