HolidayBuyer's Guide

Prices falling at AMD, but revenue is too

Some may say that nobody wins a price war, but Advanced Micro Devices and Intel are giving it a go anyway.

AMD made its latest pricing move on Monday, slashing the cost of its Athlon FX and X2 desktop processors by almost 50 percent in some cases. The FX-74 processor--an expensive high-end chip meant really for the gaming community--now costs $899 for a pair, down from $999 last week. This comes a day after Intel introduced a new expensive high-end chip of its own, the .

But the sharpest cuts came on processors for the heart of AMD's desktop lineup. The most powerful processor in the X2 lineup, the X2 6000+, now costs $241, down 48 percent from $464 last week. The next most powerful chip, the X2 5600+, is now 42 percent cheaper. The prices of other desktop chips were cut between 20 and 40 percent.

I guess there is one winner in a price war: the customer. The prices labeled here reflect purchases in quantities of 1,000 units, and so don't always match up with the price you'd pay at retail, or the price Hewlett-Packard or Dell pays for hundreds of thousands of chips. But the price cuts will eventually filter down to the customers.

Unfortunately for AMD, they'll also filter down to its bottom line. Revenue for AMD's first quarter is going to be about $400 million short of expectations, the company said yesterday, and some analysts are concerned about its cash flow. AMD plans to cut $500 million from its capital expenditures this year as it tightens its belt until it can get back on track.