Intel's stock was off 6 cents to $28.70 in early trading. AMD's was down 46 cents to $32.03.
The health of the PC market has been a source of much concern among analysts. Osha's colleague at Merrill Lynch, Steve Fortuna, recently lowered his forecasts for the market, saying it would likely grow only 3 percent in the United States this year.
"It is possible that end demand for PCs will recover later in the year, and certainly during 2002--indeed, we think that estimates calling for no PC unit growth in 2001 are too pessimistic," Osha wrote. "However, we do think that microprocessor (average selling prices) are going to continue to be under pressure for the whole year, even when unit demand recovers."
But even improved unit growth won't help Intel, he said, noting that his model predicts that the Santa Clara, Calif.-based company will see unit shipments decline 15 percent this year, as opposed to an 11 percent growth at AMD.
Osha's not alone. Last week, Thomas Weisel Partners analyst Eric Ross dropped his rating on Intel, citing severe price cuts on Pentium 4.
Osha cut earnings estimates for the current quarter from 15 cents per share to 10 cents, and for the year from 67 cents per share to 53 cents. Osha also lowered 2002 earnings estimates from 83 cents per share to 79 cents.
But although Osha thinks AMD will fare better than Intel, he said it's still likely to be hit by the sluggish PC market.
"The combination of PC end market weakness and AMD's continued (and we think ultimately correct) spending on R&D means that second-quarter results are likely to be hit harder than consensus estimates currently reflect," he said.
Osha lowered estimates for the current quarter for AMD, of Sunnyvale, Calif., from 28 cents per share to 22 cents, and for the year from $1.52 per share to $1.37. For 2002, he dropped his estimate from $2.09 to $1.81.