Severe acute respiratory syndrome kept consumers at home in China the past few months. But Intel's reaffirmation of its second-quarter sales guidance on June 6 suggests the Santa Clara, Calif., chip giant's relatively stable performance could have come at the expense of AMD (Sunnyvale, Calif.).

"It's not clear how much of a setback the negative revenue warning poses for AMD. The company has been catching up on Intel in the last few years, having raised its market share in the PC processor market to approximately 20 percent from a low of 8 percent in 1997," said Wachovia Securities International Ltd., here.

"Credibility will remain an issue following this latest stumble," said Wachovia analyst John Barton in a report. "Once again, this places an increasing importance on the successful ramp of Hammer, although Athlon 64 for the desktop is not expected to see volume production until 2004." AMD's 64-bit processors are based on the Hammer core. Its Opteron server processor was introduced earlier this year, and the Athlon 64 desktop processor is expected in September.

AMD is now forecast to post losses for the next few quarters and it may be forced to borrow from investors to boost its cash position, analysts said. "We now expect AMD's 2003 estimated cash balance to fall to about $471 million and believe that AMD will likely return to the capital markets by early fall," said Ben Lynch, an analyst at Deutsche Bank Securities Inc. here.

Earlier this year, AMD's management indicated the company could break even in the second quarter, with revenue of $715 million, but that forecast did not include the toll SARS would take. Instead, AMD now expects revenue for the quarter ending June 29 to be about $615 million, up 2 percent from $600 million in the year-ago quarter but down 14 percent from $714.6 million in the first quarter of 2003.

By: DocMemory
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