Intel, AMD chip battles play out on Wall Street

FORT COLLINS - People driving through the intersection of Harmony and Ziegler roads during the week of April 14 might have heard some raspberries being blown across the street from the rival chip manufacturers on opposite corners there.

Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (NYSE: AMD) released closely watched earnings that week. While the chip war was waged between engineers innovating in labs on Harmony Road in Fort Collins, the companies played it out financially on Wall Street.

Both companies had revised their previously stated first-quarter expectations prior to the end of the quarter. Intel revised its gross margin from 56 percent to 54 percent.

AMD's revision was a little more extreme. A week before earnings came out, the company announced it expected a 15 percent quarter-over-quarter decline in revenues "due to lower than expected sales across all business segments," according to the company release. Previously, the company had estimated that the revenue decline from fourth to first quarter would be in line with seasonal decreases, which are closer to 7 percent for the industry.

Intel was first up, releasing its first-quarter earnings on April 15. Despite a 12 percent year-over-year decrease in net income, Intel's earnings were hailed as the silver lining in a decidedly gloomy market. Company income of $1.4 billion was down compared to last year, but revenues were up 9 percent to $9.7 billion.

Intel's stock was up almost 6 percent to $22.13 the day following the release.

AMD unfortunately did not fare as well. The company reported its sixth consecutive quarterly net loss on April 17. The company saw a $358 million loss on revenues of $1.5 billion. But the lower-than-expected earnings had little impact on investor sentiment. The morning following the earnings release, AMD's stock was actually up a few cents.

The hold in the stock price could be related to the company's restructuring plans. When the company announced its revised earnings, it also revealed plans to cut about 10 percent of its worldwide workforce of 16,500. The cuts are anticipated across all business lines and should be completed by the end of the third quarter.