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Wed, Sep 12, 2007 - Page 10 News List

AMD launch clouded by Intel's new forecast

AP , SAN JOSE, CALIFORNIA

It was supposed to be Advanced Micro Devices Inc's (AMD) day with the launch of its highly touted new server chip, but Intel Corp swooped in and stole some of the headlines from its smaller rival with a boosted financial forecast.

Still, financially struggling AMD managed to have a good day yesterday on Wall Street after announcing the newest version of its Opteron server chip -- while Intel's news elicited a tepid reaction from investors.

Intel surprised Wall Street with a mid-quarter financial update -- a practice the company discontinued last year.

Intel added US$200 million to the top of its financial outlook, saying it now expects sales of US$9.4 billion to US$9.8 billion in the current quarter. That compares with its prior forecast of US$9 billion to US$9.6 billion.

Analysts polled by Thomson Financial had expected revenue of US$9.4 billion.

Intel also told investors that its gross profit margin is expected to be within the upper half of the previous estimate of 52 percent of revenue, plus or minus a couple of percentage points. It cited higher demand for its microprocessors worldwide for the upgraded forecast.

Analysts said the announcement is good news for the microprocessor market, as it indicates higher demand -- which also likely is benefiting AMD.

Still, analysts said Intel's release also had the appearance of trying to slow some of the momentum surrounding the launch of AMD's newest chip.

It is the most important addition to AMD's product lineup since the first Opteron was introduced in 2003, helping AMD secure a foothold in the lucrative server market. AMD is hosting launch events around the world -- including the marquee event in San Francisco with chief executive Hector Ruiz -- to promote the new product.

"It's kind of ironic timing, don't you think?" said Jim McGregor, an analyst with market researcher In-Stat. "Intel has definitely timed some recent announcements knowing [the new AMD chip] was launching. I don't doubt that, but both companies do that, so I won't call a foul."

Intel spokesman Tom Beermann said the decision to raise guidance mid-quarter was not related to the AMD launch.

Analysts said the upgrade was not a surprise, since checks with components makers had given many people on Wall Street signs that the microprocessor market was stronger than expected during the quarter.

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