AMD Shares Slide After Loss of Microsoft Deal

Advanced Micro Devices Inc. shares fell 10.5% after Microsoft Corp. chose rival Intel Corp.’s chip technology to power the new X-Box video-game console. Advanced Micro shares, which had gained 82% this year as it unveiled faster chips to challenge Intel, dropped $6.13 to close at $52 on the New York Stock Exchange. Intel rose $1.81 to close at $120.19 on Nasdaq. Intel’s X-Box win is a blow for AMD as Microsoft and other computer companies move into high-growth businesses such as games to make up for slowing PC sales growth. AMD had the X-Box deal sewn up until late Thursday, when Microsoft and Intel held a last-minute meeting at Microsoft’s headquarters in Redmond, Wash., according to sources at all three companies. AMD has moved beyond supplying cheap chips for home personal computers, winning market share and beating Intel in unveiling more powerful processors. “We were never prepared to get into a scorched-earth war with Intel” on the X-Box deal, AMD spokesman John Greenagel said. “Getting into a price war and using our fab capacity for the lowest-margin business is not our primary objective.”