EU's Intel ruling: Are there intangible benefits for AMD?
AMD has been broadcasting the EU's $1.45 billion antitrust fine against Intel for nearly a week. AMD is touting the EU ruling almost a week after the antitrust commission hammered Intel.
As Brooke Crothers notes, AMD's EU chatter borders on gloating. Check out AMD's home page:
And the jump page where there are a bunch of links to the EU vs. Intel background.
AMD's first reaction---delivered by CMO Nigel Dessau---was a bit emotional. Now AMD's move to wrap itself in the EU flag looks more calculated. What are the benefits to marketing yourself as the victor of an EU antitrust ruling that will be appealed by Intel?
The benefits are a bit murky and most analysts classify the perks as intangible at best.
Patrick Wang, an analyst at Wedbush Securities, writes in a research note:
We maintain our neutral rating on shares of AMD but continue to warm up to the name following the favorable EU ruling and in a healthier and improved business environment. While not directly involved, we believe AMD will stand to benefit from tighter restrictions and greater scrutiny on Intel’s implied business practices. We think the EU decision could set a precedent for the three upcoming cases in March 2010 and provide leverage regarding the ongoing cross-licensing dispute. Further, we believe AMD has significantly improved its execution with its MPU and GPU product roadmaps with Istanbul / Magny-Cours and RV770, respectively. Despite this progress, we believe AMD’s earnings model remains structurally impaired.
It should also be noted that AMD won't receive any proceeds from the EU suit.
So what are the benefits to AMD?
- For starters, the EU lawsuit and other suits could serve as a distraction to Intel.
- Better AMD execution and an EU victory could give it some ammo in the fear uncertainly and doubt wars.
- AMD is getting a lot of press out of the EU ruling.
However, there are a few negatives.
- Is victimhood enough to build a marketing campaign around?
- Will an EU flag on its home page rub customers the wrong way?
- And does AMD risk turning customers off by looking like it's gloating?
Add it up and AMD obviously sees some benefits ahead by touting its EU victory. It remains to be seen whether an antitrust victory in the EU translates to the marketplace.