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10.20.05


AMD Rubbing Intel In Processor Race

By John Stith

The problem when you're at the top is there's only one place to go and computer chip leviathan Intel may be experiencing something akin to a descent, at least for now. Intel dominated the computer chip market for years but while their earnings were very good, they are losing their grasp to rival AMD for the moment and it's not done yet.

Intel posted some impressive numbers for the third quarter. They set a record for revenues, hitting $9.96 billion, up 18% over last year and up 8% sequentially. Operating income was up 31% to $3.1 billion and earnings per share were 32 cents, up 7% from a year ago but down 3% from the second quarter. Intel is projecting a strong fourth quarter with revenues hitting as high as $10.8 billion.

Right now, Intel has some real problems. First, their market share is slipping. Sales in many markets have been slowing significantly and Intel is starting to feel it in their earnings reports. Market researcher Gartner said AMD passed Intel in terms of systems sold worldwide in the third quarter.

Then there's the issue of lawsuits. Intel is currently being investigated by the FTC and the equivalent agency in the European Union for unfair trade practices and monopolistic behavior against primary competitor AMD. The Japanese trade commission already found against Intel in these matters. Also, Intel just settled with MicroUnity for $300 million.

The reality Intel faces is, while their sales seem to be doing quite well, their market share is diminishing as AMD continues to put the screws to the chipmaker. The tough part is microprocessor sales hit a record, chipset units set a record, flash memory units set a record, wireless connectivity units set a record, and application processor units for PDAs and cell phones set a record. The only major negative product trend was motherboard, which lowered sales. What can you do when you're having record sales and revenues and you're still losing ground to AMD?

Intel does have some products in the pipeline though. With the advent of dual-core processors, this will be a new growth area for Intel and AMD. Microsoft's new Windows: Vista, due out next year, will support the new processors and the big question will be whether or not Intel can not only capitalize but regain some ground from AMD in the battle.

They've also got some strong leads with groups like Research In Motion to plug cellular processors in next generation Blackberry devices and Motorola's Moto Q smartphone. And then there's the WiMax future as well.

The future doesn't look awful for Intel but it does look challenging. They will have to find other means of challenging AMD as well continuing to rebuild some of their market share. While Intel's stocks took a slight downturn after the earnings report, Intel is still a key player and will continue to be but they have a lot of work to do.

About the Author:
John Stith is a staff writer for WebProNews covering technology and business.

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