AMD shares plunge after court repeals right to clone Intel chip

June 08, 1993|By Bloomberg Business News

SUNNYVALE, Calif. -- Advanced Micro Devices Inc. shares plunged more than 15 percent in frenzied trading yesterday after a court rescinded its right to clone Intel Corp.'s once-popular 386 chip.

AMD said, however, that it would continue to manufacture and ship its 386 chips, banking on rights it says it has under another agreement with Intel. For its part, Intel said it intended to sue AMD for about $1 billion in damages over AMD's sale of the microprocessor, or "brains" of a computer.

"We can't stop AMD from making the chips," said F. Thomas Dunlap, Intel's general counsel. "But if it does, it will be doing it knowing they continue to rack up damages."

AMD's shares, which have seesawed on court rulings, closed down $4.25, to $23.75, on New York Stock Exchange volume of more 5.2 million shares, more than four times its three-month average daily volume of 1.1 million shares, making it the fifth-most active stock on the U.S. composite. The fall shaved nearly $381 million off the value of AMD's roughly 89.6 million shares outstanding.

Intel shares jumped $1.75, to $58.125, on Nasdaq volume of about 10.8 million shares, nearly three times its three-month average daily volume of 3.7 million shares, making it the second-most active stock.

After the market closed on Friday, AMD said that a three-judge panel of the California 6th District Court of Appeal had reversed an arbitrator's award last year that gave AMD permanent royalty-free rights to Intel's 386 chip.

The court said that the arbitrator, in granting AMD those rights, "exceeded his powers by fashioning a remedy which did not fall within the scope" of the parties' 1982 technology-sharing agreement.

The latest wrinkle in the long-standing legal battle between the BTC two companies appears to be a victory for Intel, the world's largest independent maker of microprocessors.

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