Rival Chip Vendors AMD, Intel Upbeat on Earnings

Feuding computer chip vendors Intel Corp. and Advanced Micro Devices both reported better-than-expected quarterly earnings on Thursday, with AMD gaining from its clone version of a key Intel chip even as Intel demonstrated its ability to counter the clone threat.

Both companies also appeared to be benefiting from the renewed strength in the chip business and from the absence of a much-feared drop-off in demand for personal computers. Semiconductor industry trade association figures released Wednesday showed a very strong March.

AMD, showing signs of a turnaround after two quarterly losses and a difficult series of product transitions, reported first-quarter net income of $4.2 million (before preferred dividends) on revenues of $274.3 million. That compares to a loss of $43 million in the previous quarter, including $33.7 million in special charges, and a profit of $13.1 million for the comparable period a year ago.

The company said it exceeded expectations with more than $10 million in revenues from its recently introduced clone of the popular Intel 386 microprocessor, or computer-on-a-chip.

But the company still faces several challenges in its drive to gain a targeted 10% of the $1-billion market for 386 chips. A trial in the last remaining lawsuit with Intel over the 386, initially scheduled for this spring, has now been delayed until September. Some potential AMD 386 customers have been hesitant to commit out of fear that a defeat might force AMD to pull the product from the market.

Intel, meanwhile, is scheduled to introduce its new 486 “clone killer” on April 22. The new stripped-down version of the 486 is expected to be price-competitive with the AMD 386 while offering additional functions.

Intel also showed its financial might Thursday, reporting new records for both earnings and revenues as demand for the 386 and the more powerful 486 remained very strong. The company reported first-quarter net income of $197 million, a 37% jump from $144 million a year ago, on revenues that rose to $1.1 billion, 27% higher than the $894 million reported a year ago.

Analysts lauded both sets of results, and both companies’ stock rose sharply in heavy trading. AMD was up $1 per share to close at $12.625, while Intel rose $4.50 per share to finish at $52.