AMD settlement won't blunt Intel R&D, exec says

Analysts say cash infusion will attract investors to AMD; get antitrust monkey off Intel's back

Today's settlement of all antitrust litigation between Intel Corp. and Advanced Micro Devices Inc. should benefit both firms -- and shouldn't hurt Intel's R&D operation, Intel CTO and senior fellow Justin Rattner told Computerworld today.

"As a legal matter, it only concerned a very small part of the company," Rattner said. "From an R&D perspective, there aren't really any changes as a result of the agreement. For the legal people at Intel, it's a big change but I don't think the rest of us will be terribly affected."

The deal, which settles both antitrust litigation and patent cross license disputes, specifies that Intel will pay rival AMD $1.25 billion . Intel also agreed to abide by a set of business practice provisions.

For its part, AMD agreed to drop all pending litigation against Intel, including an upcoming case in U.S. District Court in Delaware and two cases pending in Japan. AMD also will withdraw all of its regulatory complaints filed against Intel with government agencies around the world.

"It's good for everyone that it's over," said Martin Reynolds, an analyst at Gartner Inc. "These long-term court battles are no good for anybody. This will make AMD a more attractive target for investors and it's certainly good news for Intel."

Reynolds said the settlement could portend that Intel will reach similar deals with other court foes.

The latest antitrust suit against Intel was filed in federal court last week by the state of New York, which alleges that Intel threatened computer makers, made payoffs and engaged in a "worldwide, systematic campaign of illegal conduct." An Intel spokesman downplayed that lawsuit, contending at the time it was a repackaging of the AMD case.

Therefore, Reynolds suggested, it's likely the AMD settlement will lead to the dropping of the New York lawsuit.

"With AMD withdrawing all complaints, it's likely all these suits will dry up," he added. "It will be hard to go forward."

The settlement should provide significant benefits to Intel over the long term, Reynolds said. "The $1.25 billion is a downside [for Intel], but that's about it. Intel can stand down in gathering all this evidence. They won't be in as many courtrooms. They can let go of some of their attorneys."

The settlement could also blunt any plans by the U.S. Federal Trade Commission to jump into the antitrust fray against Intel, said Rob Enderle, an analyst with the Enderle Group. The FTC had launched an antitrust investigation into Intel more than a year ago and had been expected to take some kind of antitrust action against the firm soon.

"This means AMD will stop pushing on the FTC and states to pound on Intel. And Intel will be able to focus on business and not do brand damage control, discovery, [and the like]," Enderle said. "Like Microsoft discovered, this doesn't necessarily stop New York or the FTC but it removes a lot of the momentum behind those efforts and effectively lowers their priority."

Enderle also noted that while $1.25 billion is a lot for Intel to pay out, the settlement is likely less than a court would have forced the company to pay had it lost an antitrust trial.

"I was estimating a judgment between $2 billion and $5 billion with penalties so this was a good deal from Intel and AMD needs the money," said Enderle. "[Intel] already looked guilty. This reduces the long-term impact from their actions substantially."

Tags AMDintel

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Sharon Gaudin

Computerworld (US)

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