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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (54272)	4/23/1998 11:50:00 AM
From: FJB	Respond to of 186894

Dow Jones Newswires NEW YORK -- Hewlett-Packard Co. has agreed to use Advanced Micro Devices Inc.'s K6 chip to power budget-priced personal computers and Gateway 2000 Inc. is also considering using AMD's chip, according to industry sources. Either deal would add another top-tier PC maker to AMD's customer base and boost Sunnyvale, Calif.-based AMD's effort to steal market share from industry king Intel Corp. Compaq Computer Corp. and International Business Machines Corp. already use the K6. H-P might use the chips in computers coming to market as soon as June, analysts speculated. AMD could announce the deal with H-P next week, some industry sources suggested. A K6 deal with H-P wouldn't come as a complete surprise. The Palo Alto, Calif., computer maker has been aggressive in cutting prices on its consumer and business machines and the K6 is priced less than comparable Intel chips. And H-P sold computers using AMD's predecessor chip, the K5. A deal with Gateway would represent a more significant change of strategy. Gateway now only sells machines based on Intel chips. Separately, AMD Thursday said it will widen its already reported first-quarter loss because it has agreed to settle for $11.5 million a 1995 class-action shareholder suit. AMD will record the settlement cost in the first quarter, widening the loss in the period by five cents a share to 44 cents a share, or $62.7 million. AMD's loss for the first quarter was bigger than expected when the company reported results earlier this month but AMD said its outlook has brightened because it solved a major K6 production problem. Revenue fell 2% to $540.9 million. AMD spent much of the quarter dealing with production problems on its flagship product. Poor production yields limited the number and speed of chips produced on each wafer of silicon. But AMD said it has resolved the yield problem on its existing manufacturing process, and made "excellent" progress in a transition to its next-generation process. The improved manufacturing should enable AMD to produce the K6 in larger volumes and at higher speeds during the current quarter. Because of its production problems, AMD had until recently been hampered in keeping up with Intel in turning out such speedy chips. Intel, based in Santa Clara, Calif., increased pressure on its smaller rival by slashing prices, forcing AMD to cut prices to dangerously low levels. Still, AMD fans point to the fact that Intel has been slow to attack the market for computers priced less than $1,000. The New York Times Thursday reported that non-Intel chips now power 15% of all new PC's, and analysts think that figure may climb to 20% by the end of the year. That is because chips from AMD, National Semiconductor Corp.'s Cyrix Corp. unit, Integrated Device Technology Inc. and other Intel rivals now account for about half the microprocessors sold on computers that cost less than $1,000, the Times said. AMD saw its share of the market for chips used in sub-$1,000 PCs grow dramatically in February. The K6 was used to power 49% of the low-cost PCs sold via retail channels during February, according to market-research firm PC Data Inc., up from 18.8% in January. For the same period, Intel's share of the sub-$1,000 PC market sank from 65.5% in January to 44.8% in February. Cyrix chips were inside 15.7% of machines in January but just 6.2% of machines in February.