AMD Aims to Take Care of Business

With a beachhead established in the server market, Advanced Micro Devices(AMD) is setting its sights on the business PC market, where rival Intel(INTC) has long dominated.

"2006 is the year of AMD's penetration in the commercial clients," said Henry Richard, AMD's chief sales and marketing officer, during a meeting with financial analysts at its Sunnyvale, Calif., headquarters. "That's our No. 1 priority."

Richard forecast the company would double the number of commercial PC platforms running on AMD next year. The company pegged its market share for commercial clients at more than 15% in 2006, up from roughly 5% right now.

Using the foothold it established within Fortune 500 companies for servers, AMD plans to convince businesses to choose its processors for their desktops and laptops as well. "People that can trust us for their server technology will trust us for their client technology," said Richard.

The company also pointed to so-called blade PCs, a new twist on thin clients, as an important part of its strategy to break into commercial PCs. While the hard-drive-less boxes known as thin clients failed to take off in the early 1990s, AMD believes security, power consumption and new usage trends could make them a viable option going forward. Earlier this month, Hewlett-Packard(HPQ) introduced an AMD-based blade PC.

AMD said it expects to ship microprocessors at twice the rate of the overall industry in 2006, thanks to gains in the business sector as well as through a focus on emerging markets worldwide.

"We are on a path to gain significant market share in the commercial client market, which up until this point has been a little bit of a tough nut to crack," Chief Financial Officer Bob Rivet said.

And with AMD focusing on increasing the average selling price of its chips, Rivet said AMD expects operating income and EPS to rise significantly in the year ahead. Shares of AMD closed up 2%, at $25.50.