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Updated from 1:05 p.m. EST

SAN FRANCISCO -- Rather than ratcheting up their battle over semiconductor-making excellence,

Advanced Micro Devices





seem more locked in a game of Anything You Can Do, I Can Do Worse.

Unfortunately, AMD and its shareholders have less of a cushion to continue playing.

Shares of the Sunnyvale, Calif., chipmaker took a wild swing on Friday, a day after the company's

fourth-quarter earnings report

did nothing to squelch fears that 2009 will challenge the company's standalone existence.

AMD closed up 5 cents to $2.07 after opening the session as low as $1.90. Semiconductor stocks, which had fallen nearly 10% this week, pulled themselves off the mat on Friday. The

Semiconductor HOLDRs


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exchange-traded fund closed up 4.3%.

AMD posted an operating loss before items of $260 million, or 68 cents a share, wildly missing analysts' estimates, as revenue fell off the cliff, dropping one-third from a year earlier.

Gross margin plunged to 23% from 44% last year.

The company's visibility into the first quarter was limited, saying only that revenue will slide below fourth-quarter levels -- as it essentially does ever year.

The glum announcement echoes similar bad news that the sector has delivered already this year, most recently the "on-second-thought-we-will" announcement by Intel that it would

shutter some manufacturing operations

that could throw up to 6,000 of its employees out of work.

AMD, in what now looks like a bit of foreshadowing, had itself announced on Jan. 16 that it would cut 1,100 jobs -- about 9% of its post-manufacturing spinoff workforce -- and institute management pay cuts.

A day earlier, Intel had delivered an earnings report that featured the No. 1 chipmaker's dance around giving a forecast for the current quarter, instead offering an "internal planning" target -- that was still below analysts' estimates.

For AMD, however, the game is no longer about beating the Street but its very survival. The company's fourth-quarter loss topped $1.4 billion, about half of which came from yet another impairment writedown of its purchase of graphics chipmaker.

For all of 2008, AMD lost $3.1 billion -- the good news being that was actually a narrower loss than the company's $3.38 billion of red ink in 2007.

Unsurprisingly, with such an income (er, loss) statement, the company's cash position has gone down the tubes -- no doubt an affront to pundits who just months ago were recommending the stock based solely on the idea that the shares were trading near cash-per-share levels.

AMD's cash position has fallen to $1.1 billion from $1.9 billion in a year's time, and shareholders would not be alarmist in wondering how long the company can continue to operate at the new reality of expected revenue levels. (At this point, the consensus estimate that revenue will fall only 21% in 2008 has to be considered the optimistic view).

Certainly, Wall Street is doing such wondering, with most firms on Friday fretting over what looks like a continued cash burn into 2010. Even the glass-half-full takes on the company didn't inspire much confidence: Investment bank Collins Stewart downgraded the stock to hold (not sell?!), saying they are unable to envision a sustainable long term business model.

Jefferies analyst Adam Benjamin was a little more direct, telling investors to sell the shares as there is little hope the company will turn around anytime soon.

That AMD shares would rise on Friday perhaps marks a new beginning for the stock -- as a favorite for daytraders. For anyone else, long-term returns are dubious at best.