AMD & Intel are both losing money in this price war

[Icepick]

http://www.nytimes.com/2006/07/07/technology/07amd.html

With the price war in full swing it looks like both competitors are feeling the pinch where it counts. They're both losing money and the consumer is winning - big time .

Article:
====================================================
Sales Falter at Advanced Micro

By BLOOMBERG NEWS
Published: July 7, 2006

Advanced Micro Devices, the second-biggest maker of chips for personal computers, reported preliminary second-quarter sales yesterday that missed the company's forecast after its larger rival Intel cut prices.

Sales for the period that ended Sunday fell 9 percent from the first quarter, to $1.22 billion, Advanced Micro, based in Sunnyvale, Calif., said yesterday in a statement. The company had previously forecast sales to be flat to slightly down from $1.33 billion in the first quarter.

Advanced Micro, which cited lower sales of laptop and desktop chips, is suffering as its larger rival drops prices to try to win back market share, according to John Lau, an analyst at Jefferies & Company in New York. Advanced Micro pushed Intel's market share in PC microprocessors under 80 percent last year for the first time in four years.

"The pricing war is escalating between Intel and A.M.D.," Mr. Lau said. "Both Intel and A.M.D. will be feeling the same impact."

Last month, executives at Micro-Star International and Gigabyte Technology, two of Taiwan's biggest makers of circuit boards for computers, said Intel officials told them that price cuts of up to 60 percent would start July 23.

Signaling price cuts in advance causes demand to stall, as computer makers put off orders to wait for cheaper components, Mr. Lau said.

Advanced Micro, which will make a full earnings report on July 20, did not give any details of its profit.

Analysts predicted earnings of 28 cents a share on sales of $1.31 billion, according to the average estimate in a Thomson Financial survey.

Share of Advanced Micro fell 7 cents, to $23.83.

Intel, which has scheduled an earnings announcement for July 19, is expected to report its largest decline in profit and sales since 2001.

 

[Henny]

Originally posted by: Icepick
http://www.nytimes.com/2006/07/07/technology/07amd.html

With the price war in full swing it looks like both competitors are feeling the pinch where it counts. They're both losing money and the consumer is winning - big time .

Article:
====================================================
Sales Falter at Advanced Micro

By BLOOMBERG NEWS
Published: July 7, 2006

Advanced Micro Devices, the second-biggest maker of chips for personal computers, reported preliminary second-quarter sales yesterday that missed the company's forecast after its larger rival Intel cut prices.

Sales for the period that ended Sunday fell 9 percent from the first quarter, to $1.22 billion, Advanced Micro, based in Sunnyvale, Calif., said yesterday in a statement. The company had previously forecast sales to be flat to slightly down from $1.33 billion in the first quarter.

Advanced Micro, which cited lower sales of laptop and desktop chips, is suffering as its larger rival drops prices to try to win back market share, according to John Lau, an analyst at Jefferies & Company in New York. Advanced Micro pushed Intel's market share in PC microprocessors under 80 percent last year for the first time in four years.

"The pricing war is escalating between Intel and A.M.D.," Mr. Lau said. "Both Intel and A.M.D. will be feeling the same impact."

Last month, executives at Micro-Star International and Gigabyte Technology, two of Taiwan's biggest makers of circuit boards for computers, said Intel officials told them that price cuts of up to 60 percent would start July 23.

Signaling price cuts in advance causes demand to stall, as computer makers put off orders to wait for cheaper components, Mr. Lau said.

Advanced Micro, which will make a full earnings report on July 20, did not give any details of its profit.

Analysts predicted earnings of 28 cents a share on sales of $1.31 billion, according to the average estimate in a Thomson Financial survey.

Share of Advanced Micro fell 7 cents, to $23.83.

Intel, which has scheduled an earnings announcement for July 19, is expected to report its largest decline in profit and sales since 2001.

Neither AMD or Intel is "loosing" money.

What part of 28 cents per share earnings don't you comprehend??

 

[DAPUNISHER]

Text

What part of 28 cents per share earnings don't you comprehend??

That was on predicted earnings of $1.31 billion, AMD stated 1Q sales were 1.22 billion, so I'd take it easy with the smartass comprehension quips That doesn't mean I don't agree that stating they are both losing money is poorly worded or inaccurate though.


:beer: for everyone@AMD for making this possible. :beer: for the Intc employees 'round here, because their stock holdings, ect. have taken a beating.

 

[CyborgNinja117]

its cheap to produce a cpu for intel and AMD... so it wouldnt be that much of a loss

 

[A554SS1N]

AFAIK, in £'s (I'm in the UK), it's around £30 for single core, and £60 for dualcore production, so anything after that is profit. I'm probably completely wrong though

 

[Regs]

nm

 

[the Chase]

We don't really want them to lose money anyway- unless we don't want CPU's anymore. Or you can make your own.

 

[Ika]

Originally posted by: the Chase
We don't really want them to lose money anyway- unless we don't want CPU's anymore. Or you can make your own.

if they start losing money, I bet that wouldn't be a bad thing - the pressure would force them to innovate, bring out better and faster products, quicker.

 

[potato28]

Originally posted by: Aflac

Originally posted by: the Chase
We don't really want them to lose money anyway- unless we don't want CPU's anymore. Or you can make your own.

if they start losing money, I bet that wouldn't be a bad thing - the pressure would force them to innovate, bring out better and faster products, quicker.

Then we hafta spend more money on upgrading our rigs....

 

[Markbnj]

I'd just like to point out that long term the consumer can't "win" if both companies are losing money.

 

[Pacemaker]

Originally posted by: CyborgNinja117
its cheap to produce a cpu for intel and AMD... so it wouldnt be that much of a loss

Cheap to produce yes, cheap to develop no.

The first one costs 1.5 billion the rest cost about three fidy. (no I don't know that those are the real prices (infact i bet they aren't), but I was trying to make a point)

 

[SonicIce]

what price war? X2's are still expensive as hell

 

[n7]

As long as they make just enough to keep making better CPUs for us, i don't care.

Cheaper CPUs for me =

 

[jiffylube1024]

Misleading title - it got me worried for a second before I read the article. If both companies were losing money then in the long term they'd be in serious trouble. They're simply not meeting profit expectations, which does mean that consumers are getting agressive pricing from both companies.

But, as Henny said, neither company are actually losing money, and are still posting earnings on shares...

 

[keldog7]

Id really like to know where people are getting the impression that prices are dropping from a price war, and not from decreased demand. If its due to a price war, we should actually be seeing Intels shipments increasing (which I don't think Intel has announced-but is conceivable, given the performance of their latest chips), or AMDs shipments increasing (which I don't think is happeneing either).

 

[Lonyo]

Originally posted by: A554SS1N
AFAIK, in £'s (I'm in the UK), it's around £30 for single core, and £60 for dualcore production, so anything after that is profit. I'm probably completely wrong though

I would be suprised if dual core chips cost twice as much to make, since things like packaging would be the same, unless you mean the chip itself, and not the whole CPU package, but I could be over-estimating the packaging costs, and over estimating dual core yields.