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Intel Accuses AMD of Defamation

Intel's spokesman, the supremely tactful Chuck Mulloy, took off his pearl-gray diplomat's gloves and accused AMD of defamation

After AMD's latest Intel-targeted broadside Thursday morning, Intel's corporate spokesman, the supremely tactful Chuck Mulloy, took off his pearl-gray diplomat's gloves and accused AMD of defamation.

He said that a lot of the brickbats that AMD has flung at Intel in the last two years rise to slander or libel but that Intel is hogtied and can't charge AMD with defamation because of the "anything goes" environment surrounding the antitrust suit AMD lodged against Intel in 2005.

"AMD is trying to damage Intel's reputation. It's determined that even if it loses the antitrust suit, in the end Intel will look like the bad guy to the consumer," he said.

What finally got Intel's goat was an "economic study" that AMD was trying to "peddle to the press," Mulloy said, that makes it look like AMD is laying its claims for damages way this side of a trial that isn't supposed to begin until April of 2009.

The study, done by the ERS Group, a litigation consultant retained by AMD's outside counsel O'Melveny & Myers, claims that Intel extracted "monopoly profits" from microprocessor sales in excess of $60 billion in the decade between 1996 and 2006.

AMD says that ERS and its head honcho Dr. Michael Williams, who's consulted with the Justice Department and Federal Trade Commission on such things as the proposed mergers of Exxon and Mobil and BP Amoco and ARCO, and on our old friends the FTC v Rambus and US v Oracle lawsuits, calculated Intel's economic return using public information and a methodology based on "Nobel Prize-winning research" by Merton Miller and Franco Modigliani that is used by half of the Fortune 1000 to analyze their own economic performance, Wall Street firms to assess potential investments and management consulting firm like McKinsey and Stern Stewart generally.

Mulloy called it, "Bull Shit," and asked if Intel should be penalized for being successful.

The ERS study claims to determine that consumers and OEMs could gain over $80 billion in the next 10 year - $20 billion for OEMs and $60 billion for consumers in the form of a 1.5% savings on a $1,000 computer - if the microprocessor market was "fully competitive."

It claimed that Intel's pro-competitive justification for its monopoly profits are "implausible" - in part because - according to relatively simple math - it's that "rarity of firms that achieved" - unlike Target, ExxonMobile or Pfizer - "a 16% or more economic return" and because it's - swear to God this is what it says - being sued by the European Commission.

AMD's press release says that only three other companies earned 16% of more, namely Microsoft, UTS and Coke, and that "each of these companies has been associated with antitrust determinations" so innuendo…innuendo…

Mulloy claimed that even the press that AMD tried to leak the story to Wednesday before putting out a press release Thursday morning threw the study back at AMD because some of the underlying numbers - on which its "wildly false and incorrect" conclusions were based - were flat out wrong.

He couldn't resist. "It just goes to show that if you pay someone enough, they will say almost anything."

He claimed that the study is part of a "political PR blitz" that AMD has mounted to capitalize on the European Commission's antitrust charges against Intel so it can run Intel's name into the ground.

It's only been a week since the EC charged Intel with antitrust violations because of its discounts and rebates and so far AMD - which has attempted to paint itself as utterly uninvolved even though the EC's statement of objections is a response to years of AMD's complaints - has- by Mulloy's count - put out three press releases, staged one press conference, racketed up its lobbyists in Washington, run full-page ads in the New York Times, Washington Post, Wall Street Journal, Austin American-Statesman, San Jose Mercury News and various online sites saying "Intel is paying and pressuring computer manufacturers to boycott AMD," and put together a press campaign in upper New York State where it's hoping to build a new plant telling the locals "how good the EC's actions is for them."

Intel of course maintains that ASPs have fallen steadily across-the-board and that if its prices were predatory and prejudicial to AMD, as the EC claims, that trend wouldn't be across-the-board as can be plainly seen in figures from Mercury Research, IDC and Gartner.

Using the ERS study, however, AMD's chief counsel Tom McCoy claims "Intel's monopoly profits of $60 billion directly contradict Intel's claim that its business practices have resulted in lower prices - in fact this study shows that billions of dollars have moved straight from consumers' pockets to Intel's monopoly coffers. That $80 billion translates into an Intel monopoly tax on every consumer who purchases a computer. That's a jaw-dropping figure that helps explain why the European Commission brought antitrust charges against Intel - the real harm that its abuse of monopoly power causes competition and consumers."

Of course no consumer has ever complained.

Some of the tinder AMD is using to burn Intel, Mulloy said, are "allusions to an SO it hasn't seen because it's confidential" and others are simple misrepresentation.

For instance, do you remember that class action that was filed back in January that claimed that Intel paid Dell over a billion dollars a year in kickbacks not to buy chips from AMD?

Well, you should because AMD has been beating that particular drum this week as evidence that the European Commission is on the right track in charging Intel with antitrust.

The only problem is that suit was withdrawn back in May, a fact AMD neglected to mention.

Seems the court refused to let Bill Lerach, the guy who filed it, be the lead lawyer for all the class actions filed against Dell after it was discovered that the SEC was investigating Dell.

Lerach of course was a partner in the old Milberg Weiss Lerach mob that took American companies for billions in dubious class actions over the years and is now under indictment itself for paying plaintiffs kickbacks.

Aside from hell freezing over, for consumers and OEMs to realize that tantalizing $80 billion, Intel's price premiums would have to drop by 50% over five years, AMD's market share of units sold would have to rise to 35% in the same five years, OEMs would have to pass 75% of their saving on to buyers and PC sales would have to stagnate at only half their historic growth spurts.

Year ASP % Change
1997 222
1998 188 -15.5%
1999 174 -7.2%
2000 170 -2.2%
2001 137 -19.9%
2002 129 -5.2%
2003 127 -1.5%
2004 134 -5.2%
2005 131 -2.0%
2006 116 -11.5%
2007 109 -6.3%

Caption: Intel asked Mercury Research to compare average x86 ASPs over the last 10 years. What Mercury's Dean McCarron came back shows a drop of $113, slightly more than 50%. Intel wants to know how that can possibly be bad for consumers.

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Intel vs AMD News Desk 08/05/07 03:58:43 PM EDT

After AMD's latest Intel-targeted broadside Thursday morning, Intel's corporate spokesman, the supremely tactful Chuck Mulloy, took off his pearl-gray diplomat's gloves and accused AMD of defamation. He said that a lot of the brickbats that AMD has flung at Intel in the last two years rise to slander or libel but that Intel is hogtied and can't charge AMD with defamation because of the 'anything goes' environment surrounding the antitrust suit AMD lodged against Intel in 2005. 'AMD is trying to damage Intel's reputation. It's determined that even if it loses the antitrust suit, in the end Intel will look like the bad guy to the consumer,' he said.

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