When Intel (NASDAQ:INTC) reported superb earnings last week, Advanced Micro Devices (NYSE:AMD) took a ride on the bigger rival's coattails. Expecting that AMD's quarter would tap into the same market strengths as Intel's, the share price shot up 9% overnight and stayed close to Intel's gains for more than a week.

Well, the numbers are in, and the joyride is over. AMD couldn't keep up with Intel this quarter -- not where it mattered, anyway.

AMD's second-quarter sales stayed flat from the last quarter at $1.18 billion. That's nowhere near as impressive as Intel's 12% sequential sales jump. And AMD lost $0.49 per share -- but that includes $0.13 per share from selling aging inventory that had been written off as losses two quarters ago. That inventory-clearing move may have boosted AMD's GAAP gross margins, but in "real" non-GAAP terms, the company's margins and average selling price both sunk.

Like I said, the joyride is over. In one fell swoop, AMD's shares are back where they were before Intel's report.

As an AMD shareholder, I'm disappointed to see such a weak revenue performance. The company resorted to barn-burning clearance sales tactics, and even then failed to keep up with the big boys down the street. However, management is telling me to keep my chin up.

The six-core Istanbul processor started shipping too late to make an impact on the second quarter's results, but it should play a large part in the next quarter. Large server vendors from Dell (NASDAQ:DELL) to IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ) are already selling systems built around the Istanbul architecture. AMD expects 45-nanometer chips, which cost less to make and run cooler on lower power inputs than the old 65-nm technology, to "dominate" sales in the fourth quarter, with the crossover point somewhere in the third.

And Microsoft (NASDAQ:MSFT) Windows 7 upgrades should make a real difference for AMD's graphics division if nothing else -- AMD has beaten arch rival NVIDIA (NASDAQ:NVDA) to the punch with video chips that support Windows 7's new DirectX 11 graphics framework.

So, while I'm disappointed in the current state of affairs, those warehoused old chips are essentially gone now, and Istanbul can put up a better fight against Intel's Nehalem chips than Shanghai ever could. I'll hold on for dear life through what promises to be a turbulent summer, hoping to eventually see AMD passing the $1.3 billion revenue mark where the red ink should turn black. Profits have this magical power to launch depressed stocks into orbit, you know.

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Fool contributor Anders Bylund owns shares in AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you'd like, and The Motley Fool is investors writing for investors.