Judgment Week for AMD, Intel … and Vista
The bruising battle between AMD and Intel this week shifts to Wall Street, where both companies are scheduled to announce quarterly results. Sure, we’ll learn just how badly Intel has hammered AMD — and whether AMD thinks it can recover quickly. But we also may receive valuable clues — some spoken, some silent–about Windows Vista’s ability to drive PC upgrades this summer.
If AMD and Intel don’t mention Vista during their earnings calls, it will reinforce widespread perception that the operating system isn’t living up to its promise. The VAR Guy has identified at least 10 reasons why Vista missed the mark. It’s a big, slow, resource-hungry operating system without a killer application. One blogger friend has even compared Vista to New Coke — one of the worst consumer product launches in history.
Although Intel and AMD each continue to work closely with Microsoft, both chip companies have made numerous moves in the Linux market this quarter. That type of bravado would have been stunning a decade ago, when every hardware and software company lined up behind Windows 95 and Microsoft.
These days, the PC market will embrace anything that jumpstarts sales. A case in point: Dell began prepping Linux desktop solutions in the shadow of Vista’s launch.
But let’s be clear. Vista isn’t bombing. It just isn’t driving overwhelming demand for new PCs. The operating system certainly hasn’t saved AMD. In fact, AMD shares declined nearly 36 percent in the first quarter of 2007, making it the worst performing S&P 500 stock during the period. Ouch. Plus, AMD announced a stunning sales shortfall ahead of this week’s earnings, and many pundits think the company will need to raise cash.
AMD’s steep fall must mean Intel profits are rising quickly, right? Well, maybe. Don’t forget that AMD pummeled Intel for most of 2005 and 2006. Now Intel may finally be getting back on track.
Analysts predict Intel will announce profits of 22 cents a share, with roughly 60 percent of Intel watchers expecting an upside earnings surprise, 7 percent fearing a downside surprise and 33 percent neutral, according to EarningsWhispers.com, one of The VAR Guy’s favorite investment sites.
And what about AMD? Investors are bracing for a big loss, and 44 percent of EarningsWhispers members fear AMD’s loss could be even bigger than expected.
Regardless of the AMD and Intel results, The VAR Guy hopes both companies have the guts to share their true feelings about Vista. Will the operating system really catch on? Or are we looking at another Windows for Workgroups — otherwise known as Windows for Warehouses, because it sat on store shelves amid tepid market demand in the early 1990s.
The answer could present itself when Intel announces earnings on April 17 and AMD follows on April 19. Listen carefully to what both companies say — and don’t say — about Vista’s market impact.