AMD Athlon Holds Its Own Against Intel

With a fourth quarter that Wall Street analysts believe outpaced expectations, AMD unveiled its latest chip, the Athlon XP 2000 , which it hopes will keep pace with rival Intel's offerings.

In fact, analyst Joseph Osha of Merrill Lynch, New York, has raised his expectations for AMD's performance in the fourth quarter of 2001, saying chip sales are brisker than anticipated.

He expects the Sunnyvale, Calif.-based chip maker to report overall revenue of $897 million for that quarter, ended Dec. 31. That would be a 17 percent increase from the third quarter. As for AMD's fourth-quarter earnings, Osha expects it to turn in a loss of 15 cents per share. He had expected a loss of 23 cents per share.

"We expected better [Pentium 4 availability [from Intel and a seasonal slowdown in the PC business to hit AMD hard late in the quarter," Osha wrote in a report released Dec. 27. "However, subsequent checks both inside and outside the company have indicated that AMD's business held up well through the latter part of the quarter."

Analysts believe Intel, Santa Clara, Calif., had a strong fourth quarter also. Jeff Goldberg, president of Washington Computer Services, a Brooklyn-based solution provider and white-box maker, said the chip makers are doing a good job of playing to their different strengths.

"The stature that Intel has reached in the marketplace due to its longevity and effective marketing gives it an advantage over AMD," Goldberg said. "And AMD's lower price gives them an advantage in those areas that are less brand-sensitive."

At the same time, AMD continues working to keep pace with Intel.

Last week, AMD unveiled a new processor on the same day Intel released its 2.2GHz "Northwood" Pentium 4 chips. The Athlon XP 2000 ,AMD's highest-end processor,is shipping at $339 each in 1,000-unit quantities. Intel's 2.2GHz Pentium 4 costs $562 each in 1,000-unit quantities.

That price differential can have a significant impact on a solution provider's bottom line, said Goldberg, citing as an example the deployment of a medical billing system. "If I can make incremental margin wrapped in an umbrella of a $20,000 turnkey system that includes PCs, and I sell an Athlon, I'm making [higher margin."