SAN FRANCISCO -- It's showtime for
Advanced Micro Devices
Reeling from an outpouring of red ink and a debilitating mountain of debt, AMD unveiled its best hope for any near-term salvation: the long-awaited Barcelona microprocessor.
The chip is AMD's first major processor upgrade in years, and will finally give AMD a quad-core chip, nearly a year after rival
quad core Xeon chip.
The question now is whether Barcelona will prove to be too little, too late.
Shares of AMD were up 13 cents, or 1%, to $12.74 in midday trading Monday. Intel shares were up 16 cents to $25.63.
AMD will fete its new chip at the San Francisco campus of Lucasfilm on Monday evening, an event AMD has billed as "the most anticipated premiere of 2007."
But launch party hyperbole notwithstanding, the release of Barcelona means the propaganda war of test results and specifications waged by both AMD and Intel for several months will now give way to real-world achievements.
"The customers get the final say, so watch the OEMs
original equipment manufacturers," says chip analyst David Kanter of Real World Technologies. "That's what ultimately tells the tale."
According to AMD, about 50 different server models from various OEMs will begin shipping with Barcelona Monday, and the number is expected to increase through the end of the year.
AMD is coming out of the gate at a disadvantage though, says Kanter, pointing to the top clock speeds of 2GHz that the first versions of Barcelona will be capable of.
Intel's current quad-core chips, by contrast, sport frequencies up to 2.93GHz.
"If you look at the pricing, they
AMD aren't pricing as if they are kings of the hill. They recognize that they haven't quite delivered on frequency at this point in time," says Kanter.
While the initial version of Barcelona looks well suited for applications like high-performance computing, Kanter believes AMD needs to deliver a chip with at least a 2.6Ghz clock speed to be truly competitive to a broad range of customers.
At the very lest, the introduction of Barcelona means AMD is no longer at as much of a disadvantage in its matchup with Intel, which is fielding a much newer line of microprocessors.
That mismatch, and a brutal price war, has meant tough times for AMD, which has lost more than $500 million in each of the past two quarters.
The divergent fortunes of the two chipmakers are reflected in their stock prices. AMD is trading near its 52-week low of $11.27; Intel is not far from its 52-week high of $26.52.
On Monday, Intel also
raised its financial forecast for the current quarter, projecting revenue between $9.4 billion and $9.8 billion, instead of the $9 billion to $9.6 billion it initially expected, and said that gross margins will be in the upper end of its initial expectations.
Intel also has several new chips of its own in the pipeline that it hopes will blunt the impact of AMD's Barcelona. The company has promised to ship a version of its Xeon processor with smaller circuitry (which allows for better performance or more features) by year's end, and to release a chip called Nehalem, which features a brand new microarchitecture, in 2008.
AMD, meanwhile, will release Phenom, a variation of the Barcelona chip geared for desktop PCs, in December. After that, however, the company's pipeline of future products is less certain.
"I'm sure AMD has more on its internal road map than we are seeing, but it's going to have to become more visible to investors and likely to customers as well," says Stifel Nicolaus analyst Cody Acree, "or AMD is going to have to pick up the pace of its introductions to simply match the offerings of Intel."