AMD's Red-Sky Morning

Intel has mounted a sharp counteroffensive, however, releasing a torrent of improved dual- and quad-core processors and using its manufacturing muscle to wage a price war with AMD. The price cuts have taken a toll on both companies' profit margins, although AMD seems to be suffering more.

On Tuesday, Intel reported flat year-over-year sales and profit in its first quarter, but said ASPs for its desktop and notebook processors held steady despite what it described as a "very competitive" pricing environment.

Meanwhile, AMD's acquisition of graphics chipmaker ATI has added $3.7 billion in long-term debt to the company's balance sheet.

Should AMD need to raise more money in the capital markets to fund its ongoing capital expense and operational requirements, investors fear the company will take on even more debt, or dilute its shares by issuing more equity.

The various concerns have sapped AMD's stock -- which is down 58% in the past 12 months -- and made it a popular target for short-sellers. On Wednesday, a day after Intel's report, shares traded up 4.3% midday to close the regular session up 44 cents to $13.91.

As investors and analysts try to size up AMD's first-quarter performance, estimates are all over the map. The average analyst expectation calls for a loss of 48 cents, according to Thomson Financial. But the 27 individual analyst estimates run the range from a loss of 11 cents to 82 cents.