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AMD and Intel Gear Up for Price Wars; E*Trade Tech Troubles Persist

Plus, E*Trade's rivals flourish on new volume.

SAN FRANCISCO -- Price Wars will not be a box-office blockbuster like the upcoming

Star Wars

movie, but for

Advanced Micro Devices

TST Recommends

(AMD) - Get Report

and

Intel

(INTC) - Get Report

, they'll be a big part of business in 1999.

Shares of AMD are down sharply early this morning after

Merrill Lynch

semiconductor analyst

Thomas Kurlak

downgraded the stock to neutral from accumulate, noting that price wars between AMD and Intel would impact earnings. Kurlak also cut his earnings estimates for Intel for the first quarter and the full year, according to

CNBC

. Kurlak could not be reached for comment.

AMD was down 2 9/16 to 18 3/8 in early trading. It was trading at 25 7/16 on Monday. Intel fell 5 1/16 to 133 5/8 in early trading.

A recent report from

Credit Suisse First Boston

lists concerns similar to Kurlak's. The report states that it could be "a challenge" for AMD to meet first-quarter revenue estimates despite the company being able to meet unit estimates of 5.5 million.

"While our unit estimate is achievable, we are less confident with our

average selling price estimate given Intel's resolve to regain low-end market share via aggressive price reductions and high clock speeds for Celeron," the report states. CS First Boston maintains a hold rating on AMD.

AMD received a boost earlier this week on reports that

Gateway

(GTW)

would be using AMD chips in some of its units. On Wednesday, Gateway said it would be using AMD chips in some of its computers for sale in Japan. But CS First Boston estimates that the chips will only account for around 50,000 unit sales per quarter.

Also hurting AMD was news that it would not make a presentation

today at the ongoing

NationsBanc Montgomery Tech Week

conference.

E*Trade Trouble Continues

E*Trade's

(EGRP)

tech trouble might not be over yet.

As customers mulled over E*Trade's online apology about yesterday's trading problems, some were also finding they couldn't trade this morning, according to emails to

TheStreet.com

. At the log-in page, a notice read: "Access to some areas of your account may be temporarily unavailable. If you would like to place a trade please call Customer Service at 1 800 786 2575." There was also a "Service Unavailable" notice on the trading page.

Yesterday, from about 10:15 a.m. to 11:30 a.m. EST, no customers could trade online at E*Trade. For the remainder of the day, some customers continued to have problems. In addition, the automated phone-trading system was also down for about 15 minutes. E*Trade said the problem was the result of a software change Tuesday night that malfunctioned after trading started.

In its letter of apology posted on the site, E*Trade said: "We at E*TRADE would like to apologize for the interruption in electronic trading service that occurred on Wednesday. As a pioneer and innovator in online investing, we continue to be committed to the goal of being the leader in electronic personal financial services. ... At E*Trade, we always strive to enhance the quality of products and services we deliver to our customers. We have built one of the most advanced and reliable technology, service and support infrastructures in our industry. We know, as most of you know, that technology is imperfect. That does not, however, deter us from our commitment to being the best."

E*Trade did not immediately return calls for comment, although a spokeswoman said earlier today that the problem had been worked through.

--

Amy Olmstead

No Slowing Rival Online Brokers

E*Trade's problems haven't slowed other online brokerages, which continue to flourish following reports that volumes have far exceeded expectations.

Shares of

Ameritrade

(AMTD) - Get Report

are taking a breather after a huge run-up this week. The stock was down 7 15/16 to 120 5/8 in early trading. It is still up around 70 points since Jan 28. Secondary brokerage firms have picked up the slack, with

Siebert Financial

(SIEB) - Get Report

up 12 to 61 1/2 early on and

JB Oxford

(JBOH)

up 11 to 23.