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Intel, AMD kiss and make up

Intel and AMD have been involved in long-standing dispute over intellectual property and antitrust issues. Intel was fined $1.45B by the EU for its anticompetitive practices and last week, New York Attorney General Andrew Cuomo filed an antitrust lawsuit against Intel.

Cuomo had rather harsh words for Intel, stating, “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market. Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”

However, Intel and AMD now appear to be making amends. The pair issued a joint statement today which reads, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

As a part of the settlement, Intel will pay AMD $1.25 billion, AMD will drop all of its pending lawsuits against Intel, and the pair will enter into a new 5-year cross license agreement. In addition, Intel will "abide by a set of business practice provisions" in the future.

AMD CEO Dirk Meyer today championed the agreement, stating, "Today, I am pleased to announce the last major component of that transformation – in the form of a transparent and public agreement with Intel to create a level playing field in the x86 processor industry – taking us one big step closer to achieving our bold vision."

Meyer continued, adding, "Today marks the beginning of a new era... one that confirms that the game has changed for AMD. It is an important milestone for us, for our customers, our partners, and most important – for consumers and businesses worldwide. In addition, it represents the culmination many years of litigation and regulatory engagement."

Following the announcement, AMD shares are up 25 percent to $6.61 while Intel is up almost a percentage point to $20.05 as of 10:00 AM EST.

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RE: Should have Held Out for more Cash
By Mint on 11/12/2009 12:24:33 PM , Rating: 4
Anti-trust is not something that's easy to win. For example, rebates to Dell are nothing more than a volume discount with different financing.

Moreover, it's rare that the company suffering from the actions gets a decent chunk of the fines. I don't think the EU gave anything to AMD.

$1.25B is a pretty strong admission of guilt. Intel would rather avoid paying $2-5B to the DoJ, and AMD would rather get $1.25B instead of nothing. Everyone's happy.

RE: Should have Held Out for more Cash
By Sahrin on 11/12/2009 2:06:52 PM , Rating: 4
It sounds like you're making the mistake of confusing a criminal case with a civil one. This is *not* anti-trust. AMD is suing for damages, not filing criminal charges for anti-trust violations.

All AMD has to do is get the jury to agree that it's troubles were even remotely related to Intel's actions. Intel has earned well over 250 Billion in revenue since 1999 - if AMD were to even get an integer percentage of that (likely what they would be awarded by a jury - damages plus (percent culpability times revenue)) it would blow away the settlement being agreed to.

A company never gets a chunk of fines, fines are damages done to the public - not damages done to a private enterprise. AMD's only recourse to get money is to sue Intel itself for violating the law. My point was to say that Intel is 'getting off easy' relative to their crime, not that AMD had experienced a windfall (or missed out on one).

An out-of-court settlement will as a rule include *NO* admission of guilt. Intel is paying AMD to shut up, not paying AMD because they were wrong.

This does *nothing* to help Intel with the DoJ. If they broke the law (violated anti-trust laws and injured the marketplace) the Justice Department's responibility is to protect the people (not private enterprise) from law-breakers. Intel will be held responsible for the damage done to the market, not to AMD - and no amount of paying off AMD will protect it from that (should justice decide to pursue a case against Intel), which at this point is pretty much a given. This is the kind of case a US Attorney can make his career (all the way up to SG or Assistance AG) on.

RE: Should have Held Out for more Cash
By sonoran on 11/12/2009 2:52:54 PM , Rating: 2
Intel has earned well over 250 Billion in revenue since 1999 - if AMD were to even get an integer percentage of that

Are you arguing that Intel was not entitled to compete for ANY of the x86 processor market share over this time? That's the only way your total revenue figure makes any sense. How about subtracting the percentage of the total market they are legally allowed to compete for? And good luck defining what that is, since no law on the books codifies that percentage - what's "allowed" and what's not is all up to interpretation.

By Sahrin on 11/12/2009 3:14:00 PM , Rating: 2
I wasn't arguing anything like that, I was using it as an arbitrary basis for possible damages. I wouldn't be surprised if AMD would use that as a baseline figure (Intel's total revenue during that period was...we believe Intel's actions denied AMD an approximate 10% of market share over 10 years...thus we should be entitled to 10% of revenue, plus triple damages...but we're not greedy - so we'll settle for the $25B).

Probably, AMD would end up getting something in the high singles to low teens - not less that $5B, not more than $12-13B. Of course, they probably wouldn't get paid for 10-15 years, but there it is. My bet would be $7B when all was said in done.

Of course at this point it's all academic.

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