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May-07-2008AMD jumps on Intel antitrust suit, potential restructuring(topic overview)
CONTENTS:
- The Wall Street Journal said that most of the details in the 108-page court filing are blocked to public access because of a protective order. (More...)
- According to AMD, the new evidence is the result of an evaluation of 200 million pages of documents which AMD obtained from Intel and PC manufacturers in a discovery request. (More...)
- Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. (More...)
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The Wall Street Journal said that most of the details in the 108-page court filing are blocked to public access because of a protective order. Intel's defense is so far is that the microprocessor market simply is competitive and that its business practices were not illegal. "AMD's complaint about Intel's discounting boils down to a complaint that Intel is a more efficient competitor," the company said in its filing. One of the key reasons for AMD to add allegations to the suit is support its claim that it needs more time for evidence discovery. [1] The add-on to the 2005 antitrust suit claims Intel paid off Acer, Dell, Gateway, major Japanese manufacturers, and system builders to block out AMD. Advanced Micro Devices has expanded the allegations in its antitrust suit against Intel, saying its larger rival paid computer makers not to do business with AMD. In court papers filed May 1 in U.S. District Court in Delaware, AMD said Intel paid off Acer, Dell, Gateway, major Japanese manufacturers, and system builders and distributors "to close their doors to AMD." Where it couldn't buy exclusivity from computer makers, Intel focused its payments on keeping computers based on AMD microprocessors away from large business customers, AMD said.[2] A new filing in AMD's antitrust case against Intel points to actions involving PC makers that include Dell Inc., International Business Machines Corp. and Hewlett-Packard Co. But the 108-page document, filed Thursday in U.S. District Court in Delaware and unsealed Monday, has most details blacked out under a protective order that restricts disclosure of trade secrets and other confidential dealings by parties involved in the lawsuit.[3]
The stock is up nearly 20% in the past week. The stock's run-up also comes as AMD and rival Intel INTC exchanged another volley in their ongoing legal battle. AMD released a court filing laying out evidence for its allegations that Intel coerced PC makers including Dell DELL and Hewlett-Packard HPQ to not use AMD chips in their products. Intel filed its own brief rebutting the claims.[4] After hitting a one-year high of $16.19 in July, the stock hit a one-year low of $5.31 in January. AMD shares are rising today after the company filed a brief in its antitrust lawsuit against Intel Corp. opnbrktINTCclsbrkt. The brief identifies evidence allegedly proves INTC paid and pressured computer giants like Dell Inc. opnbrktDELLclsbrkt and Hewlett-Packard Co. opnbrktHPQclsbrkt not to buy microprocessors from AMD in order to preserve its monopoly.[5] AMD has accused Intel of abusing its dominant position in the x86 microprocessor market to stifle competition through a variety of means, including offering deep discounts to vendors to remain exclusive partners, punishing those OEMs that considered using a second chip supplier and giving away products in order to maintain market share. For the first time, AMD has presented its allegations in a formal summary of its case'a 100-page plus document that details its allegations against Intel and claims to show how the company has used its position with OEMs to dominate the market since IBM introduced the first personal computer with a version of the Intel 8086 processor. In its counterargument, which also runs over 100 pages, Intel contends that the marketplace is competitive and that AMD's accusations are an attempt to make up for years of producing inferior products. Each side claims that its x86 microprocessor technology contains the superior innovations needed by PC and server vendors as well as the average consumer.[6] While industry observers believe the asset-smart strategy could overall be positive for AMD, it could also distract management attention as it executes what would amount to a delicate transition at a time the company is struggling to vend off intense competition from Intel in the microprocessor area and Nvidia Corp. in the graphics IC sector. The Sunnyvale, Calif., company isn't disclosing details of the asset-smart manufacturing strategy it first announced more than one year ago but industry sources expect an announcement soon from AMD, possibly ahead of or during its annual shareholders' meeting on Thursday (May 8.) AMD's depressed shares initially surged in after-hour trading on Tuesday and rose more than one percent in early trading Wednesday to $7.20 from $7.12 before retreating again following unconfirmed reports the company plans to merge its manufacturing operations with a foundry partner and spin off the business as a separate company.[7] The remaining business would continue to design, market and sell the company's microprocessor and graphics IC products, according to analysts. Such a move would help to sharply reduce the company's operating costs, giving it the much needed financial relief in its bruising fight against Intel although AMD would still face tremendous obstacles keeping up with its archrival in rolling out advanced technology products. One area where AMD would see immediate cost improvements if it pursues a spinoff of its manufacturing operation is in its selling, general and 8administrative costs, which in 2007 and in the first quarter represented approximately 23 percent of total revenue, compared with 14 percent for Intel.[7]
Intel's efforts were anything but oblique." Lenovo: "Lenovo launched an AMD desktop but, it postponed the launch event, limited promotion, and relegated the AMD to its low-end volumes." Intel's own pre-brief accuses AMD of "hyperbole" and argues that its complaint is counter-intuitive. "AMD filed this lawsuit in the midst of a run of more than three years during which it enjoyed unprecedented success in increasing its market share, its range of products, and its profits," argues Intel. "More recently its fortunes have sagged as a result of poor business execution with new key products like its Barcelona microprocessor for servers. stripped of hyperbole, AMD's Complaint accuses Intel of competing too aggressively, by offering customers attractive, discounted prices and marketing and technical support to win their business."[8] The complaint charges that customers were forced not to use AMD processors. At that time the Japanese anti-trust body was investigating Intel and the EU Commission also had its eye on Intel's behaviour. In 2006, AMD contacted the German anti-cartel office (Bundeskartellamt), claiming that Media Saturn Holding ''' majority share holders in the two largest retail electronics chain stores in Germany ''' was giving Intel preferential treatment. Intel's German office was searched in February of this year in connection with the complaint.[9]
For reasons that are not clear, Gateway'a longtime exclusive user of Intel chips'dropped AMD. "Gateway suddenly 'phased out' AMD in July 1999, and Gateway abruptly cancelled its launch of a machine based on AMD's Athlon processor," according to the documents. (Acer, which now owns Gateway, now uses AMD processors in Gateway PCs.) How and why Intel would have caused Gateway to do this and what evidence AMD plans to present of this remain unknown. The public versions of these documents are heavily redacted due to a protection order that the two judges assigned to the case agreed on to protect trade secrets and other proprietary information. In an interview, Chuck Diamond, lead outside counsel for AMD, said Intel has used the protection order to excess in order to shield its sales practices from the public.[6] In the filings, AMD claims that all of the major OEMs'Hewlett-Packard, Dell, IBM, Acer, Gateway'received special treatment from Intel if the companies bought only Intel processors. These relationships with vendors formed the base of Intel's practices and led to AMD's exclusion from the market place, AMD argues. If these vendors, or some of the other smaller companies, decided to look at or build PCs or servers with AMD processors, they were punished by Intel, according to AMD. For example, in the late 1990s, Gateway took a serious look at AMD processors and decided to offer a line that used the company's chips.[6] The documents have been published online with several sensitive segments blacked out. AMD alleges its has proof of Intel's efforts to force it out of the market, claiming that as it became more competitive "antitrust compliance went out the window, as Intel scurried to lock AMD out of as many customers and market segments as possible." Among the alleged practices, AMD claims Intel paid manufacturers to use its chips exclusively, and later to drop AMD machines from their line-ups. "At various times, Intel also paid Gateway, Acer, the major Japanese OEMs, and various system builders and distributors to close their doors to AMD," the document claims. AMD then goes onto name individuals and incidents, though these sections are heavily redacted.[8]
AMD has taken the gloves off in its antitrust suit with Intel, calling the chip giant "predatory" and claiming it paid manufacturers to drop its products. The accusations form part of the company's pre-trial brief, which aims to convince the court to accept the testimony of its witnesses.[8] Intel spokesman Chuck Mulloy said AMD agreed to terms of the order and that it is "disingenuous to complain now." The brief, and one from Intel that was also released Monday, are tied to a dispute currently before the court over how much longer the suit's discovery period will continue and in what form. AMD wants an additional nine or 10 months to depose witnesses, arguing it needs to depose "a healthy number" of people to build and present its case.[10]
Intel denies all of the allegations and accuses AMD of using the courts to protect itself from legitimate competition. AMD filed suit in Delaware against Intel in June of 2005, accusing its competitor of abusing its monopolistic position.[9]
The company confirmed Monday that it has filed sealed court documents alleging that Intel Corp. used unfair business practices to stop AMD from winning microprocessor contracts with major computer makers.[11] Shares of Advanced Micro Devices Inc. continued to rise Tuesday as documents revealed the chip maker filed an antitrust lawsuit against competitor Intel Corp. and an analyst said the company may be close to retooling its manufacturing practices.[11]
The stock's rise, which adds to a 6 percent gain on Monday, also comes after a new filing in AMD's 2005 antitrust lawsuit against larger rival Intel Corp (INTC.O: Quote, Profile, Research ) that added to AMD's list of allegations that Intel pressured and paid PC makers not to buy AMD chips.[12] Advanced Micro Devices Inc. expanded a list of allegations against Intel Corp., claiming its rival paid and pressured computer titans not to buy AMD chips in order to preserve a monopoly.[3] Advanced Micro Devices Inc. added to a list of accusations against its rival Intel Corp., saying the company put pressure on computer companies not to buy chips from AMD.[13]
For a few years before 2006, AMD managed to take market share from Intel, particularly in the market for processors powering server computers. About two years ago, Intel embarked on a reorganization that saw the chipmaker get several important products out before its smaller rival, including a quad-core processor and next-generation 45-nanometer chips that deliver higher power-to-performance ratios.[2] First of all keep in mind when this was actually filed back in 2005 when AMD had the best processors back in the time of NetBurst which I believe everyone believes now is crap. From what I have read about this I believe that the reason AMD is doing this is because when they had the best products for years they still could not break the Intel monopoly.[1]
The Wall Street Journal reported Monday that a filing in the antitrust case brought by Sunnyvale-based AMD (NYSE: AMD) against Santa Clara-based Intel (Nasdaq: INTC) builds on a June 2005 antitrust complaint the company first filed.[13] American Technology Research analyst Doug Freedman said in an interview that there could be a sizable cash payment for AMD if Intel agrees to settle the case. "I'm not saying there's a settlement here, but there is probably some value in the case and AMD might come out of this better off than some have expected," he said. Freedman said that Wall Street is also anticipating the launch of AMD's "asset light" program, in which it plans to contract out much of its manufacturing to third-party companies. Wall St. analysts have long sought such a strategy from AMD, which has been plagued with manufacturing delays and glitches for more a year.[11] "There's AMD's ongoing restructuring, probably some data we're due to get on the asset-light strategy, and the lawsuit is becoming better understood," American Technology Research analyst Doug Freedman said. It has been a little more than a year ago now that AMD Chief Executive Hector Ruiz announced that the company would be retooling its manufacturing strategy to cut costs and ease cash flow problems. In its most recent earnings conference call with analysts, Ruiz hinted that a detailing of that strategy would come sooner rather than later.[12]
SAN FRANCISCO -- Advanced Micro Devices AMD shares were up sharply Tuesday on rumors that the chipmaker is getting closer to unveiling its long-awaited restructuring plan. The money-losing chip firm has promised investors that details about its new manufacturing strategy are coming, and Wall Street was abuzz in speculation Tuesday that AMD may use its annual shareholder meeting later this week to announce the plan.[4] SAN FRANCISCO (Reuters) - Advanced Micro Devices Inc (AMD.N: Quote, Profile, Research ) shares jumped more than 12 percent on Tuesday on investor optimism that the beleaguered chipmaker could soon announce its long-awaited strategy to revamp manufacturing to cut costs.[12]
"What's been bandied about is the asset-light part which could be the partial separation of AMD's design and manufacturing arms," said CRT Capital Group analyst Ashok Kumar. "On the manufacturing side, they would likely partner with Chartered (Semiconductor) (CSMF.SI: Quote, Profile, Research ) (CHRT.O: Quote, Profile, Research ) but maintain a 51 percent ownership of any such venture." AMD also holds its annual stockholder meeting in Austin, Texas, on Thursday morning. Those events are often short on news, but Kumar said it was at least possible that AMD could detail specifics of its asset-light manufacturing strategy.[12] For some time, AMD has talked about a new fab-lite strategy, but it has failed to provide any details. According to reports from Reuters, AMD could spin-off its manufacturing arm. AMD, in turn, would keep its design group.[14]
According to AMD, the new evidence is the result of an evaluation of 200 million pages of documents which AMD obtained from Intel and PC manufacturers in a discovery request. According to U.S. press reports, AMD's legal counsel, O'Melveny & Myers LLP, claims that these materials contain documented email exchanges between leading PC manufacturer employees and Intel that demonstrate the illegal practice of crowding competitors out of the market. [9] As Intel and AMD near the end of the discovery process in their U.S. antitrust battle, the two companies have begun fighting over whose testimony will make it to the big dance. In a legal filing, AMD has pointed to the employees at some of the technology world's biggest names - HP, Dell, IBM and others - who it thinks will help make its case. Intel has responded in kind, and it's now up to a judge to decide on the strength of the vendors' arguments. Following a dispute over the number of depositions allowed in the case, Special Master Vincent Poppiti appointed to hear evidence from both companies ordered up a pair of "preliminary pre-trial briefs." Well, it's those very briefs which have now been turned over to the press.[15] What can be gleaned from the filings are the companies that AMD claims have been influenced by Intel's anti-competitive behavior. AMD fingers a laundry-list of major OEMs: Dell, Hewlett-Packard, IBM, Lenovo, Gateway, Acer, Sony, NEC, Toshiba, Fujitsu, and Hitachi as holding anti-competitive, exclusive arrangements with Intel. It also calls for testimony from smaller builders such as Supermicro and Rackable. All the sections covering these vendors are heavily censored, however, making it hard to grasp anything beyond that AMD claims to have acquired specific evidence of misconduct.[15]
According to the Wall Street Journal, the evidence shows that Intel coerced and paid computer manufacturers like Dell, Acer, Gateway, IBM and Hewlett-Packard not to use any AMD products.[9]
The latest filing said Intel paid customers to abandon development of computer models that were essential to the success of a new line of AMD processors.[2] Processor manufacturer AMD has introduced new evidence in the anti-trust case against its competitor Intel, in federal court in the U.S. state of Delaware.[9] The papers, which were submitted May 1 and made public May 5, were filed as part of the antitrust case that AMD brought against Intel in 2005. The case, which has been assigned to the U.S. District Court in Delaware, has been scheduled for an April 2009 trial date.[6] AMD's beefy filing claims to offer new evidence to support the original accusations filed back in 2005, at the U.S. District Court in Delaware.[15]
AMD and Intel have each filed a series of new documents in federal court as the ongoing legal dispute between the two chip makers moves toward a 2009 court date.[6] The brief expands on AMD's initial complaint filed in June 2005, following many months of discovery during which AMD received more than 200 million pages of documents from Intel and computer-maker customers. Included, he said, are passages from email exchanges between top executives at large computer makers and at Intel proving that Intel took illegal measures to exclude AMD from the marketplace.[10] AMD first filed an antitrust lawsuit against Intel in 2005, claiming that it engaged in unfair business practices in deals with Dell, IBM and HP. The discovery phase has generated an estimated 200 million pages of documents so far. It appears, we are far from reaching the end.[1]
Intel used discount schemes that made it uneconomical for AMD to compete for a customer's business, and deployed various strong-arm tactics against partners that refused to go along. Those retaliatory tactics included withdrawing marketing funds, withholding critical technical and road map information, allocating scarce products away from disloyal companies, and generally scaling back the level of customer support, the filing said. In its own brief, Intel denied any anticompetitive practices.[2]
"We cite chapter and verse, and we name names." Among the few tidbits made public in AMD's brief was mention of a decision by H-P to accept only 160,000 of one million free chips offered it by AMD. "No rational computer manufacturer would leave 840,000 free, state-of-the-art microprocessors on the table unless it had been foreclosed from using them by exclusionary conduct (by Intel ). That is precisely what happened," AMD's brief reads.[10] AMD has filed new accusations, alleging that that Intel "pays people not to deal with AMD." This new claim is the result of AMD getting a hold of'several' e-mails between Intel and PC makers, according to AMD counsel Charles P. Diamond. Unfortunately, the public won't get the nitty and gritty of this new information.[1] AMD (Sunnyvale, Calif.) also filed a new antitrust suit against rival Intel Corp., according to reports.[14] Most of the details in the 108-page document, unsealed Monday, have been blacked out, due to a protective order restricting the disclosure of trade secrets and other confidential dealings involving the parties in the suit. AMD sued Intel in June 2005, accusing the chipmaker of illegally using its monopoly to shut AMD out of the market.[2] "The evidence exists." Unfortunately, most of this purported evidence has been redacted from the public version of the brief. Both companies had previously signed a confidentiality order to guard trade secrets, making for long, tantalizing passages buried behind this kind of nonsense and more of it in AMD's latest 108-page summary.[15]
In a public version of the filing released by AMD Monday, most of the text summarizing the evidence AMD found was blacked out.[10]
AMD's attorneys are expected to take depositions throughout the rest of the year and possibly into 2009. The latest filings offer a glimpse into how AMD plans to present its case before the federal court.[6] Intel denies it engaged in anticompetitive conduct and argues the microprocessor market is a competitive one. It says AMD is looking for court protection from price competition.[10] AMD says Intel has maintained an illegal monopoly in the microprocessor market. Intel has about 5,800 employees at its Folsom campus.[13]
Sunnyvale (CA) - The legal battle between Advanced Micro Devices and Intel has become more contentious, as AMD has added to its list of allegations filed against the rival chip-maker.[1] Intel has denied the allegations, claiming it beat AMD with better products.[11] The delays lead to a sharp decline in AMD's share price last year. AMD is executing better this year and has a significant product launch coming in June, Freedman said.[11] Shares of Sunnyvale, Calif. -based AMD jumped 59 cents, or 9 percent, to $7.12, having risen 6 percent on Monday.[11]
"What's been bandied about is the asset-light part which could be the partial separation of AMD's design and manufacturing arms," said CRT Capital Group analyst Ashok Kumar, told Reuters. "On the manufacturing side, they would likely partner with Chartered, but maintain a 51 percent ownership of any such venture."[14] According to one sell-side analyst, speaking on condition of anonymity, the rumors have AMD splitting into two separate companies, one with in-house chip manufacturing and the other as a purely chip design-focused firm; or perhaps into three companies, with a third spinoff focusing on graphics chips.[4]
While none of the hypothetical scenarios are particularly new, the rumors may be getting some momentum because of AMD's upcoming shareholder meeting on Thursday. "It feels like a rumor that's taking off because it has some merit in that we know an announcement is coming at some point," said the analyst, adding that the shareholder meeting nonetheless seemed like an unlikely forum for AMD to announce the news.[4]
"AMD's complaint about Intel's discounting boils down to a complaint that Intel is a more efficient competitor," Intel said.[2] The filing is part of the company's 2005 antitrust suit against Intel, the reports said.[14] When does an Intel chipset launch? When it's first mentioned by the company in public? The next time? The time after that? The 'Eaglelake' chipset family has been discussed by Intel on several occasions, but it'll apparently be truly launched next month.[15]
All Times are ET. Intraday data provided by ComStock ]] ComStock, an Interactive Data Company and subject to the Terms of Use.[10]
The company said that AMD was seeking court protection from discounting and other legal practices within a competitive environment.[2] The two companies, locked in an ongoing legal fight, submit new court papers as the 2009 trial date looms.[6]
Intel is seeking limitations on the number and length of depositions. "They're asking for way more than is necessary," says spokesman Chuck Mulloy. The two companies have until May 12 to respond to each other's briefs and are scheduled to present their arguments at a hearing on June 5 before the discovery and trial judges.[10]
"The current brief reflects that the allegations are more than allegations," said AMD spokesman, Michael Silverman.[15] AMD considers the protective order more restrictive than necessary and would prefer to make the material public.[10]
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. [12]
SOURCES
1. TG Daily - 200 million pages and counting: AMD adds to the tally of accusations against Intel
2. AMD Says Intel Paid PC Makers To Boycott Rival -- Antitrust -- InformationWeek
3. Free Preview - WSJ.com
4. AMD Jumps on Spinoff Buzz | Semiconductors | AMD DELL HPQ INTC - TheStreet.com
5. Advanced Micro Devices (AMD) NewsBite - AMD Rises On Antitrust Evidence Discovery
6. AMD, Intel Court Fight Continues
7. EETimes.com - Analysis: Is asset-lite a smart move for AMD?
8. PC Pro: News: AMD blasts "predatory" Intel
9. heise online - Intel "paid vendors not to use AMD"
10. UPDATE: AMD Outlines Evidence In Antitrust Suit Vs Intel
11. AMD jumps on Intel antitrust suit, potential restructuring
12. AMD shares jump on restructuring optimism | Markets | Hot Stocks | Reuters
13. AMD alleges Intel pressured computer makers - Sacramento Business Journal:
14. EETimes.com - AMD to spin-off fab operations?
15. AMD now has 'more than allegations' against Intel | Channel Register
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