AMD hits Intel with price uppercut

Advanced Micro Devices announced further price reductions on some of its best desktop PC microprocessors on Monday, a sign there is still no end in sight to its price war with rival Intel.

It's great news for users, who have been treated to improved microprocessor technology and better deals over the past year as the two giants slug it out. Signs the price war was cutting into profits at the companies had given rise to fears the price war may be nearing an end, but the AMD move indicates that's just not so.

AMD slashed prices on its top-of-the-line desktop PC microprocessors to $799 per pair and $599 for a pair, from $999 and $799, respectively, in its previous price list from Jan. 22. The company also reduced the price of some of its best dual core processors, the Athlon 64 X2 5600+, which runs at 2.8GHz, to $241 each, from $505, and the Athlon 64 X2 5200+, to $188 from $295.

In addition, AMD lowered three of its dual core offerings for the desktop to below $100 each.

And the new price list shows AMD isn't about to back down in this price war despite the obvious impact to its finances.

The Sunnyvale, California company on Monday warned it expects to report revenue of $1.23 billion for the quarter ending March 31, 2007, down from its prior forecast of between $1.6 billion and $1.7 billion. AMD blamed low average selling prices for the downturn, yet another sign the price war with Intel is causing financial pain. The revised revenue figure represents AMD's worst since the second quarter of last year, when it reported revenue of $1.22 billion, a time when it did not include the merged ATI graphics business with its results.

Both Intel and AMD have reported worse finances as a result of their market share battle. Intel's revenue in the fourth quarter of last year fell 5 percent year-on-year to $9.7 billion, while its net profit plummeted 39 percent to $1.5 billion. AMD said its revenue in the fourth quarter was $1.37 billion excluding the ATI operations, with operating income of $63 million, down from operating income of $272 million a year earlier.