AMD Gains, Intel Loses in the X64 Money Race

Published: January 24, 2006

by Timothy Prickett Morgan

Chip makers AMD and Intel have reported their latest financial results, and those results clearly show AMD gaining ground and Intel losing some--but you will never hear Intel's new upper management ever admit to this, of course.

For the fourth quarter ended December 25, 2005, AMD had record sales of $1.84 billion, up 45 percent compared to the year-ago quarter, and operating income went up by more than a factor of 10 to $206 million. Because AMD is now operating at the volumes that are necessary for it to be profitable, the company's net income was $96 million in the quarter, reversing a $30 million loss from the fourth quarter of 2004. Earnings came to 21 cents per share in the fourth quarter of 2005, a lot better than the 8 cents a share loss a year ago. Excluding its memory products (which were spun out in an initial public offering in late December as a company called Spansion), sales were $1.35 billion in the quarter, an increase of a whopping 78 percent compared to last year and driven mostly by the more widespread adoption of AMD's 64-bit Athlon and Opteron processors. AMD said that mobile, desktop, and server processor sales "grew significantly" in the quarter, driven particularly by dual-core processors and particularly in the server space. AMD said that sales were strong in North America, Europe, and China, and said further that it had boosted its share of the X64 processor market to 15.3 percent, compared to 11 percent a year ago. AMD added that it expected its first quarter 2006 to be flat to slightly down, which would give it about a 70 percent growth rate compared to the first quarter of 2005.

AMD has also tapped Dirk Meyer, a former chip designer from the former Digital Equipment who came to the company in 1995, to be its president and chief operating officer. Meyer, who is a mere 44, was the designer of the Alpha 21064 and 21264 processors at Digital, and he quickly rose through the ranks at AMD. In 1996, he headed up engineering for the Athlon X86 clone processor, and in 1999, he was put in charge of engineering for the Computation Products Group at AMD. Since 2004, he has been president and chief operating officer of AMD's Microprocessor Solutions Sector. Hector Ruiz has relinquished the role of president and is now chief executive officer and chairman of the board at AMD.

Over at Intel, which still has monopoly-level control over the X86 and now the X64 processor markets, sales in the fourth quarter came in at $10.2 billion, up 6 percent, with operating income up 14 percent to $3.3 billion and net income up 16 percent to $2.5 billion. Earnings were 40 cents per share, up 21 percent. Sales came in about $200 million below expectations because of lower-than-expected desktop processor sales, according to the company. Sales for Intel were flat in the Asia/Pacific region, and "sequentially lower" in the Americas region. Intel said that its total processor volumes were up, setting a new record, but that its average selling price was slightly lower. Chipset sales set a new record, and motherboard shipments were up as well. Sales in the Digital Enterprise Group, which makes processors and chipsets for servers, workstations, and PCs, fell by 5 percent, while sales in its Mobility Group rose by 45 percent.