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self-proclaimed difficulties selling in the European market have been keeping

Advanced Micro Device's


stock under wraps for the past few weeks. On Wednesday afternoon investors will get a good sense of whether they can expect the sympathetic trendlines of the two stocks to get less cozy.

AMD is scheduled to report its third-quarter earnings Wednesday after the close of regular trading. Analysts polled by

First Call/Thomson Financial

, several of whom reduced their estimates after

Intel warned, expect the company to earn 62 cents a share, compared with a loss of 36 cents a share a year ago. And investors who think AMD has been unfairly tarred with the dominant chipmaker's brush will be glad to know that most observers aren't too worried about AMD's bottom line.


analyst Dan Scovel, for one, thinks AMD is relatively insulated from the problems Intel ran into in Europe. For one thing, he notes, much of the money AMD makes in Europe comes from flash memory. Flash memory, a component of devices like

Palm Pilots

and cellular handsets, is, at least for the time being, facing hot demand, and prices have risen accordingly.

Moreover, Scovel says any revenue weakness -- he's looking for sales to total $1.26 billion -- will be counterbalanced by the drubbing the European currency has lately taken, by virtue of lower production costs at its Dresden, Germany plant. (Scovel rates AMD a strong buy, and his firm hasn't done underwriting for the company.)

But AMD bulls are more interested in the battle for market share against Intel, particularly in the high-end market. "They can offset weakness with incremental market share gains against Intel," says Scovel. That's because of the wide discrepancies between what Intel and AMD charge for their chips. Intel's average selling prices are just under $200, whereas AMD's are just under $100.

AMD bulls have been hoping that pricing dynamic would create a favorable environment for AMD in a time when some consumers and information technology purchasing managers, especially in Europe, seem reticent to spend money on new PCs. They're also hoping that Intel's recent production difficulties in the high-end market, which resulted in an August recall of the company's 1.13-gigahertz

Pentium III

chips, have opened the door for share gains in the lucrative market for the fastest processors.

New research suggests those hopes are well-founded. More than half of the retail stores surveyed by tech research firm

FHI Research

said that AMD's high-end Athlon processors dominated chip sales above the 800-megahertz level in September. That trend creates a very favorable product mix for AMD, somewhat offsetting the problems AMD has had maintaining market share in the low-end market.

FHI's monthly

Communication and Computing Report

(formerly the

Boswell Report

) estimates that the


chip represented 86% of AMD's unit shipments in September, as opposed to around 14% for the cheaper


. Accordingly, the publication claims that AMD's average selling prices grew an impressive 12.8%.

"The real strength they're showing is the high-end machines," says FHI analyst Danny Lam. "And Intel is just not there." CCR shows the low-end


processor making up about 64.3% of Intel's unit shipments in September, helping cause Intel's average selling prices to decline 10%.

All this talk about September market share will sound a bit inconsequential if AMD doesn't reassure investors about the single biggest worry on their minds. Is the long awaited year-end boom going to materialize?

"We'd all like to hear that the Christmas season is kicking in," says Scovel at Needham. "That would make a big, big difference in the stock market's sentiment that the semiconductor business is falling to the center of the earth."

Scovel concedes that the recent slew of warnings in the PC sector has tempered his enthusiasm from what it was a month ago. But he remains optimistic, considering the seasonal boost in demand as inevitable as the seasons themselves. "If it doesn't kick in this year, that would be unprecedented."