Profits down, shares up

AMD and Intel both down but not out

Leading CPU manufacturers AMD and Intel have both announced terrible financial results this week, with their profits and revenues slumping markedly. The outlook wasn't quite as gloomy as many analysts had been expecting though, and traders desperate for a glimmer of hope after the recent stock exchange blood bath latched on to the slump in profits as good news. And so bizarrely the paper value of both companies rose sharply, lifting the entire tech sector with them. It's a funny old world...

First up was Intel, announcing that they had made a profit of just $485m in the three months to March, down a staggering 82% on the same period last year. Overall revenue was about $6.7bn, a 16% drop compared to this time last year, but Intel had predicted just last month that the fall-off would be even worse. Investors breathed a sigh of relief, and Intel's stock price jumped 20%. Then last night AMD pulled the same trick, revealing that profits for the last three months had fallen around 35% to $125m, despite a modest increase in sales to $1.2bn. Again this was slightly better than expected, resulting in a 20% leap for their shares as well.

Intel has seen its slice of the CPU market falling as AMD's Athlon processors forge ahead and doubts are raised about the performance of the Pentium 4 with current software. No number of adverts featuring strange blue men can make up for high costs and low benchmarks. Drastic price cuts to Intel's next generation processor which were announced recently may help lift sales out of the doldrums though, and the company remains confident of the future, predicting better times ahead.

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