Watch out AMD: If Intel got hammered...

Watch out AMD: If Intel got hammered...

Summary: The stage is set for AMD's fourth quarter results Thursday and trap doors are everywhere.AMD most likely had a dreadful quarter amid product delays and price competition--not to mention Intel's scale.


The stage is set for AMD's fourth quarter results Thursday and trap doors are everywhere.

AMD most likely had a dreadful quarter amid product delays and price competition--not to mention Intel's scale.

Intel reported its results on Tuesday and shares were thumped. The company missed estimates and delivered a weaker than expected revenue outlook, but management was fairly upbeat on its conference call. Why? Intel doesn't have much competition because AMD doesn't have its act together.

Intel CFO Stacy Smith said:

The CPU business is [roughly] seasonal when you look at the unit volume that we expect in the first quarter. We saw demand grow through the fourth quarter. We didn't see anything unusual in terms of cancellations and we didn't see anything unusual in terms of inventory building up. Our inventory is lower than I'd like. The channel inventory that we have visibility into is at the low end, so it all felt pretty healthy through the fourth quarter.

Intel CEO Paul Otellini about the U.S. economy:

I have the same caution that I think that everybody in America who watches CNBC has today. You hear all of the pundits saying that the world is going to go to a trash basket and you worry. It may be a self-fulfilling prophecy. At this point though, we don't see anything on the horizon. Our customers don't see anything on the horizon. I was at CES last week talking to people from all around the world and we just don't see it.

Does that sound like the sky is falling? I didn't think so. Nevertheless, Intel cut its first quarter revenue outlook and got booed by analysts. So why is Intel confident? AMD will spend most of 2008 getting its house in order. That fact means Intel has little competition. The unknown is how much time AMD has to spend fixing its business. We'll find that out when AMD reports its fourth quarter.

Expectations for AMD's results are low. According to Thomson Financial, AMD is expected to report a fourth quarter loss of 36 cents a share. It's not expected to be profitable for the next four quarters. Sales for the fourth quarter are expected to be about $1.78 billion.

Deutsche Bank analyst Ross Seymore advocates that AMD shrink its ambitions and focus on more profitable businesses--a common refrain. His biggest focus areas for AMD are PC growth, market share losses to Intel and Nvidia, the health of the ATI business and average selling prices.

Other analysts have the same outlook for AMD and are clearly off the bandwagon. Can AMD say anything that will make analysts more optimistic? Given the reaction to Intel's results the answer would appear to be no.

Topics: Health, CXO, Enterprise Software, Hardware, Intel, Processors, Software, IT Employment

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  • I tihnk AMD will turn out fine

    There was an old song back when I was in high school that said, "If you don't expect that much from me, then you won't be let down."

    I think it was by Dishwalla, but that is besides the point. The point is, we don't expect AMD do to well because they currently hold the market for the Cheap CPU, again. With the economy looking bad, cheap may actually look good.

    Where while the media has their attention on "more power," people are buying into, "What can I afford?"
    • Logic!

      Glad to see someone thinking logically. I always go for price and value, not what the media thinks everyone wants or needs !
      • Value and performance is the key...

        if I am not performing any major calculations, why should I purchase a high dollar Intel part where a lower cost AMD part will do just as well.

        If we look at it, the processor is waiting on us humans for further input and not the other way around. So, why should I purchase a high dollar part!
  • Competition

    Competition from AMD is the only thing that motivated INTC to get its lazy arse in gear. I hate to see that end.
  • The difference? No one expects AMD...

    to do well. Intel should have rocked though. When you competition falls on its face and you don't shine, something is wrong.
  • Initial headlines are bad, but doing well

    The initial headlines are bad, but that's the first cut analysis, which is always wrong. AMD had a lower than expected loss, not including the writedowns. The expectation on the street was 36? loss/share, but it turned out to be only 17? loss. It's trading higher in afterhours. Quite the contrast to Intel which was hammered, despite having good first-cut headlines.
  • RE: Watch out AMD: If Intel got hammered...

    I thought that maybe the EU was going after AMD. If you can't compete, sue.
  • just because Intel goes a certain way doesn't mean everyone else has to

    go the same place or route.
    so what if they think they have no competition in the space carved out for them.
    AMD started messing up when they started thinking they needed to compete in the same space again.
    it was great when they were making their own space and hang Intel.