AMD stock dives amid price war
9.5 percent drop comes after clash with
Intel cuts computer chip
prices
By JORDAN ROBERTSON, Associated Press
First published: Saturday, January 13, 2007
SAN FRANCISCO -- Shares of Advanced Micro Devices Inc. fell more
than 9.5 percent Friday, a day after the world's No. 2 microprocessor
maker said plunging computer-chip prices hacked into the company's
fourth-quarter results.
AMD, which plans a $3.2 billion computer chip factory
in Saratoga County, warned late Thursday that operating income for
the quarter -- excluding business units and charges related to newly
acquired graphics chipmaker ATI Technologies Inc. -- is expected
to be "positive
but substantially lower" than in the third quarter.
Sunnyvale, Calif.-based AMD blamed the decline on "significantly" lower
average selling prices in the quarter for microprocessors, which
act as the core calculating engines in computers. Unit sales were
up, but were offset by the falling prices, AMD said. The company
did not provide details.
Shares of AMD dropped $1.92 to close at $18.26 in
Friday trading on the New York Stock Exchange. Its much larger rival,
Intel Corp., gained 21 cents to close at $22.13 on the Nasdaq Stock
Market.
AMD also said that revenue for the quarter ended Dec.
31 -- excluding ATI-related segments -- is expected to increase about
3 percent from the $1.33 billion reported in the previous quarter.
AMD is scheduled to report its fourth-quarter earnings
on Jan. 23. On average, analysts have been expecting the company
to earn 22 cents per share on $1.85 billion in total sales.
Some of AMD's woes in the quarter can be traced to
a price war with Intel as AMD battles inch-by-inch to capture new
customers and market share.
AMD has steadily stolen market share away from Intel
with processors that some customers and analysts have viewed as faster
and more energy-efficient than Intel's offerings.
AMD has also inked deals with once-exclusive Intel
customers like computer-maker Dell Inc.
But Intel has taken dramatic steps to halt AMD's encroachment
and reverse falling profits.
Intel has slashed the price on older chips and introduced
powerful new chips with a new design that vastly reduces energy consumption
while boosting power.
In September, Intel announced a massive restructuring
calling for the elimination of 10,500 positions to streamline its
operations. The cuts are expected to save Intel $3 billion per year
by 2008.
Copyright 2007 Associated Press. All rights reserved.
This material may not be published, broadcast, rewritten, or redistributed.
All Times Union materials copyright 1996-2007, Capital Newspapers
Division of The Hearst Corporation, Albany, N.Y.
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