The drubbing suffered by

Advanced Micro Devices

(AMD) - Get Report

after it beat Wall Street by 8 cents this week and the big wet kiss bestowed on

Emulex

(ELX)

after its warning served to underscore the difficulty of guessing how an earnings report will affect a tech stock in the short run.

For insight into the bear case on AMD, we spoke to a fund manger who's been shorting the chipmaker. (Like most shorts, he asked that his name not be used.) "At the end of the day, AMD missed on the top line," he said. And guidance for the current quarter was shy of expectations as well. (AMD came in on the low end of its sales guidance but was in line with First Call estimates.)

What's more, much of the upside on the bottom line came from expense control and lessened depreciation, neither of which speaks to the core of the business, he said.

Of broader significance, though, is the implication for the rest of the industry. Remember, AMD has clearly gained some share from

Intel

(INTC) - Get Report

, but the company is still underperforming on the top line.

When Intel warned in March that first-quarter sales could undershoot the mark by as much as $500 million, some bulls quickly concluded that Intel's loss was likely to be AMD's gain. But this week's earnings report makes it clear that Intel's miss represented weak demand, not a huge competitive surge by AMD, he says.

And don't forget

Dell's

(DELL) - Get Report

problems and a forecast by Gartner that PC shipments this year are likely to grow by 10.7% this year, down sharply from last year's pace of 15.5%.

Making a bad situation even worse are expectations that Intel will take a page out of AMD's old playbook and aggressively cut prices.

Indeed, Tom Smith, who covers the chip market for Standard & Poor's, says worries over a price war were responsible for the heavy selling of AMD shares, not a potential market slowdown. After looking at AMD's numbers and

Micron's

(MU) - Get Report

performance, Smith declared PC sales "steady as she goes" and not a real source of a concern at the moment.

Even so, there are money managers out there "who were smart enough to buy AMD at around $8. Now that it's

been as high as $40 a share, some are simply taking money off the table and perhaps waiting to see what Intel does later in the month," said Smith.

With so much writing on the wall, the rough treatment meted out to AMD on Friday should come as no surprise. If it did, you probably lost money.

Emulex, though, was a chart of a different color. There was a general expectation that the company would miss the third quarter, but the warning Emulex delivered this week was worse than most had expected.

Instead of EPS of 27 or 28 cents on sales ranging from $106 million to $108 million, management told investors to expect a profit of just 20 cents or 21 cents a share on sales of $88 million or $89 million.

S, why did the stock gain nearly 9% the next day? Just look at a 90-day chart. By the end of March, the stock had been beaten down by more than 18% since the beginning of the year by a series of negative notes by Punk Ziegel analyst Steve Berg, who called the miss, along with Goldman Sach's Laura Conigliaro and others.

The stock finally got cheap enough, at about 17 times estimated earnings, that investors smelled a buying opportunity and moved back into the stock.

Drat Those Penguins

With Linux becoming more and more competitive with Unix and even Windows, you'd think that the acquisition of JBoss by

Red Hat

(RHAT)

would put to rest questions about the viability of the open-source business model. But it hasn't.

"I'm still not convinced that a business model based on thousands of programmers working for free is going to stand up for 10 or 20 years," said Chuck Jones, a software analyst for Stein Roe.

Jones' remark undoubtedly sets blood to boil in the Linux crowd, but like it or not, the mainstream world is still somewhat leery of the whole concept of "free" software. During an interview months before his company was purchased. JBoss CEO Mark Fleury expressed some frustration with the open-source image, saying "just because some of us wear beards, it doesn't mean we're Marxists."

Bearded or not, Fleury is no fan of "getting a T-shirt and nothing else for your hard work," and apparently drove a very tough bargain before selling his company for $350 million -- plus $70 million more if he can hit certain performance marks.

Just last year, sources said he asked for only about $200 million when talking to

BEA Systems

(BEAS)

. How much he asked for when reportedly negotiating with

Oracle

(ORCL) - Get Report

earlier this year is unclear, but published rumors that Oracle pulled the plug on the deal because of concerns over intellectual property issues don't seem well-founded.

Stuart Cohen, CEO of the Open Source Development Lab, an advocacy group for open source, says, "I've heard lots of rumors about why the deal fell through, but IP problems were one of them." Cohen notes that issues around intellectual property invariably pop up in discussions around open source -- well-founded or not.

Cohen also dismisses concerns about a likely cultural conflict between the hard-nosed Fleury and Red Hat executives, saying, "Culturally, the main point is that open source runs in their blood."

As to conflicts with

IBM

(IBM) - Get Report

now that Red Hat will be selling an application server strong enough to compete with Big Blue's WebSphere, CFO Charlie Peters says, "IBM sells a lot of hardware with our software on it. Now they'll being selling even more." And that, he says, will easily trump any bruised feelings over competition in the far less lucrative software arena.