Intel is being squeezed hard by Advanced Micro Devices

Intel Corp. (Nasdaq:INTC) is being squeezed hard by Advanced Micro Devices Inc. (Nasdaq:AMD) and the pressure isn't going to let up anytime soon.

Shares of the world's largest chipmaker tumbled in early trading because of concerns about the company's declining gross margins, which are expected to fall to 50 percent this year, missing analysts' forecasts, according to Bloomberg News.

``AMD is providing intense competition,'' said Michael Cuggino, chief executive officer of Permanent Portfolio Funds, which manages about $850 million, including Intel shares, in an interview with Bloomberg. ``The price war is minimizing the margin considerably.''

Wall Street's expectations for the fourth quarter were modest -- limbo contest at a wedding low -- and Intel managed to post results in that context that weren't awful. Profit plunged 39 percent and sales fell 5 percent to $9.7 billion. Excluding share-based compensation, Intel earnings $1.7 billion, or 30 cents, beating Wall Street expectations.

The smart, resourceful and good-looking readers of Blogging Stocks also saw this one coming. Of the 582 responses to our site's poll, 52 percent were expecting the Intel to beat expectations, 35 percent were expecting an in-line quarter, and 13 percent were expecting a miss.

Eric Buscemi sees a silver lining for Intel is the growing demand for notebooks and desktops and Microsoft Corp's (Nasdaq:MSFT) Vista operating system. Buscemi argues that the decline in Intel's shares represents a buying opportunity and I see his point.

Intel is the sort of stock where sentiment fluctuates wildly. Wall Street seems to think these sort of companies either are awesome or stink. Savvy investors know the truth lies somewhere in the middle.