Advanced Micro Devices (NYSE: AMD) comes to the end of year at a 52-week low of $7.62. Very few stocks have done as badly over the last couple of years. In February 2006, the shares traded above $42.

When the company was doing well, it was taking market share in the server and PC industries by producing better chips than larger rival Intel (NASDAQ: INTC). In some of these segments, the company had about 25% of the market and said it could get to 40%. Intel fought back. It pushed its R&D to produce better products and cut what it charged for chips, which hurt AMD's gross margins and drove the company to a loss.

AMD made matters worse by purchasing graphics chip company ATI. That loaded AMD's balance sheet with debt, just as its operating income fell apart.

AMD could do a few things to improve its position.

The chip company says it will have an operating profit by the end of next year. But, it keeps releasing its products late, and they are often underpowered. The firm's new Barcelona chip has been a disappointment. AMD might be better off giving conservative release dates and product information and then doing better than forecasts.