Analyst: AMD, Intel Could Settle Lawsuit

Analyst Tim Luke at Barclays Capital is speculating that AMD and Intel could settle their contentious lawsuit before it gets to trial in March 2010. Both AMD and Intel would benefit by ending the lawsuit, which has cost each company millions of dollars in legal fees. For Intel, it also would help end some uncertainty at a time when the company is under scrutiny from regulators in the United States and overseas.

Despite the wave of antitrust litigation crashing in on Intel, one analyst reportedly is predicting that the private lawsuit between the chip maker and rival Advanced Micro Devices could be ending soon.

In a research note Nov. 10, Barclays Capital analyst Tim Luke said that a settlement would be beneficial to both Intel and AMD, and that he felt it could happen before the two sides are scheduled to go to trial in March 2010 in a Delaware courtroom.

Luke's note came a day before AMD's annual analyst day event, and a week after the N.Y. Attorney General's office filed a lawsuit against Intel alleging anticompetitive practices. The N.Y. suit was the latest legal case dropped on Intel, which also is appealing a $1.45 billion fine from the European Union for similar charges.

Analysts also believe that the Federal Trade Commission, which also is investigating Intel, could level charges before the end of the year.

Intel officials have denied any wrongdoing in the cases, which allege that the chip maker used payments and coercion to limit the use by systems makers-including Dell, Hewlett-Packard and IBM-of products from AMD.

Despite all the legal issues mounting against Intel, a settlement could help AMD as well as its larger competitor, Luke said.

Both sides would save on legal bills by ending a lawsuit that already has cost hundreds of millions of dollars, produced thousands of pages of evidence and conducted 2,200 hours of depositions.

For AMD, ending the lawsuit would help with the company's financials as its struggles to return to profitability, Luke said. It also would enable it to negotiate a new cross-licensing deal with Intel and possibly divest itself from it Globalfoundries holdings. Globalfoundries was the company created earlier this year when AMD, in a joint venture with Advanced Technology Investment Co. of Abu Dhabi, spun off its manufacturing business.

Intel officials have said that Globalfoundries is not covered by the cross-licensing deal between their company and AMD.

For Intel, a settlement would end a good bit of uncertainty, Luke said.