SAN JOSE, Calif. (AP) - It was supposed to be Advanced Micro Devices Inc.'s day Monday with the launch of its highly touted new server chip, but Intel Corp. swooped in and stole some of the headlines from its smaller rival with a boosted financial forecast.
Still, financially struggling AMD managed to have a good day on Wall Street after announcing the newest version of its Opteron server chip -- while Intel's news elicited a ho-hum reaction from investors.
Intel surprised Wall Street with a mid-quarter financial update -- a practice the company discontinued last year.
Intel added $200 million to the top of its financial outlook, saying it now expects sales of $9.4 billion to $9.8 billion in the current quarter. That compares with the previous forecast of $9.0 billion to $9.6 billion.
Analysts polled by Thomson Financial had expected revenue of $9.4 billion.
Intel also told investors that its gross profit margin, a key measure of the company's profitability, is expected to be within the upper half of the previous estimate of 52 percent of revenue, plus or minus a couple of percentage points.
Intel cited higher demand for its microprocessors worldwide for the upgraded forecast. Microprocessors are the core calculating engines in computers, from desktops and laptops to larger corporate servers that handle Internet traffic and other large volumes of data.
Analysts said the announcement is good news for the microprocessor market, as it indicates higher demand -- which also likely is benefiting AMD.
Still, analysts said Intel's release also had the appearance of trying to slow some of the momentum surrounding the launch of AMD's newest chip.
It is the most important addition to AMD's product lineup since the first Opteron was introduced in 2003, helping AMD secure a foothold in the lucrative server market. AMD is hosting launch events around the world -- including the marquee event in San Francisco with Chief Executive Hector Ruiz -- to promote the new product.
"It's kind of ironic timing, don't you think?" said Jim McGregor, an analyst with market researcher In-Stat. "Intel has definitely timed some recent announcements knowing (the new AMD chip) was launching. I don't doubt that, but both companies do that, so I won't call a foul." Intel spokesman Tom Beermann said the decision to raise guidance mid-quarter was not related to the AMD launch.
Beermann said the company recently discovered that revenues would be significantly higher than the range the company had previously forecast, and "once we became aware of the situation, we felt an obligation to shareholders and others to make the information public." He said the company is not reinstating the practice of issuing mid-quarter guidance but would take quarters on a case-by-case basis.
Intel shares slipped 12 cents on the news, to $25.35.
Analysts said the upgrade was not a surprise, since checks with components makers had given many people on Wall Street signs that the microprocessor market was stronger than expected during the quarter.
"Everybody kind of knew that the PC market has been very strong, especially notebooks, so I think that obviously was all already in the stock," said JoAnne Feeney, senior research analyst with FTN Midwest Securities Corp.
AMD shares rose 33 cents to $12.94, as some positive reviews started trickling in and the company released performance metrics of the chips.
AMD hopes the new product -- which Ruiz, the chief executive, has acknowledged is six months behind schedule -- can help it regain some of the ground it has lost to Intel since last year and break even by the end of this year.
Hurt by stronger products from Intel, AMD's share of the worldwide server market slipped from its peak of about 25 percent last year to about 13 percent this year, according to Mercury Research.
Intel's $148 billion market value is 21 times the size of AMD's, and Intel has squeezed AMD with price cuts and a quick transition to a new chip-making process.
Intel is trying to come back from its own financial misfortunes. Last year, the Santa Clara-based company's profit fell 42 percent from the previous year.
For the first six months of this year, Intel earned $2.91 billion on $17.5 billion in sales. Profits were up 30 percent from the same period the previous year.
Meanwhile, AMD, which was still digesting its controversial $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., lost $1.21 billion on $2.61 billion in sales in the first six months of 2007.
In the same period a year earlier, AMD had net income of $274 million on $2.55 billion in revenue. AMD has said the results don't directly compare between the years because of the ATI acquisition.