Let's cover chips and AMD first. According to industry analyst Gartner (NYSE: IT ) , the chip maker saw strong gains in the server market at the expense of its rival, gaining in every category. For example, Gartner pegged AMD's global third-quarter share of x86 server revenue at 15.7%, up more than 4% sequentially and nearly 10% year over year. ("x86" refers to a specific type of architecture used by both AMD and Intel to make several families of computer chips.)
The gains are explained, at least in part, by Intel not having a dual-core 64-bit server processor available for months while major vendors such as HP, Sun Microsystems (Nasdaq: SUNW ) , and IBM (NYSE: IBM ) inked deals to develop servers around AMD's Opteron technology. But now Intel has finally entered the race. It's developing a new chipset, nicknamed Bensley, due in the first quarter of next year, according to industry watcher Kevin Krewell of the Microprocessor Report.
Bensley could halt AMD's gains in their tracks, and maybe even reverse them. Or it could mean little. Either way, for investors counting on their AMD stock to juice their 2006 returns, next summer's report of second-quarter 2006 server results will likely prove critical.
Let's switch from chips to the servers themselves. On the surface, HP's latest server sales numbers appear anything but favorable. First, its overall server market share declined on a unit basis -- from 28.39% to 26.97%. Second, its year-over-year volume growth in the x86 server market came in at 8.12%, well below the market average of 14.64%. Each stat seems to point to a poorly performing business. But neither takes into account that HP doesn't operate on a calendar quarter, nor that Hurricane Katrina impacted its production facilities. Gartner says the company's manufacturing capacity was largely back to normal as of early October -- after the data for its report was compiled -- and that it was probably fulfilling a large backlog.
A closer look at the x86 numbers shows that, on a revenue basis, they're arguably quite good. HP's lower-than-average volume resulted in more than $2 billion in quarterly sales. That translated into 13.23% year-over-year growth and set the pace in the sector, which booked an average annual gain of 11.66%. Rival and Motley Fool Stock Advisor pick Dell (Nasdaq: DELL ) , on the other hand, grew volume more than 19%, but its revenue increased only 8.97% over the same period. In other words, HP is getting more from every dollar it invests in the x86 server market. And that's never a bad sign.
Further Foolishness at your service:
- You didn't count AMD out yet, did you?
- It's hard to not be impressed by Intel's course correction. But is it really enough?
- AMD first aimed at servers in April.
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Fool contributor Tim Beyers is here to serve. Really. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.