Right before Advanced Micro Devices (NYSE: AMD) CEO Hector Ruiz received a completely inappropriate raise from his board of directors, he apologized to Wall Street for having yet another disastrous quarter. The world's second-largest PC chip maker didn't deliver any newer products to compete against a resurgent Intel (NASDAQ: INTC) and all but admitted guilt for overpaying -- by a few billion -- for Canadian graphics chip maker ATI in 2006's $5.4 billion acquisition.

AMD, once the PC chip maker to beat, has been soundly whipped by Intel in the last 18 months due to design and manufacturing efficiency leadership by the larger rival (especially from its Israeli design team). AMD seems to be "asleep at the wheel" as it shaved 40% off its market value just in the last two months alone. You can be sure that institutions holding AMD shares are quite displeased. Is Ruiz on his way out? That's the word in some circles, and his pay raise after AMD's latest quarterly nightmare definitely did not help things.

In Ruiz's defense, he's correct in that the recent drop-off in AMD's stock price "doesn't make sense," as AMD is slated to reduce capital spending by 35% to $1.1 billion in 2008 and take other moves to reduce costs. However, the company's fumbling of a highly-advanced chip product called "Barcelona" may be the leader's downfall. Even though the "four core" processor was introduced to the market in September (much later than planned), flaws surfaced right off the bat, pushing back volume production until the first quarter of next year. Ruiz responded by saying "we blew it, and we're very humbled by it . . . and we learned from it, and we're not going to do it again." That may not cut it in a market tired of excuses and missed opportunities.

[Update, 12-18-07: According to Marijke Shugrue with www.bitepr.com, Hector Ruiz did not receive a raise in 2007 -- Ruiz's compensation remained the same in 2007. The recent SEC 8-K filing that was reported as a "raise" for Ruiz last week was related to an IRS regulation adjustment. While the recent SEC filing does mention Hector Ruiz's last raise, this raise took place 18 months ago in May 2006.]

Intel Corp. (NASDAQ: INTC) seems to be reaping the benefits of massive layoffs from last year as well as a surge in new products that are outpacing longtime thorn-in-the-side competitor Advanced Micro Devices, Inc. (NYSE: AMD). AMD's woes have been huge of late, although the release of a new quad-core microprocessor may be able to help it get back on track. Unlike in the past, however, Intel is now in reactive mode, not the proactive one.

Intel CEO Paul Otellini said this week that the world's largest chipmaker may speed up work on ever-faster computer chips just as the demand for PCs continues to rise around the world. Intel is positioned nicely to take advantage of expected double-digit growth in PCs, as emerging markets continue buying up hordes of personal computers and saturated markets -- like the U.S. -- fuel growth by replacing desktop PCs with laptop systems at a blistering pace.

Intel's recent focus on developing new chips to outpace products by its scrappy and smaller competitor is winning it more customer sales and loyalty after years of being perceived as beaten when it came to cost and performance of processors used in laptop computers through to corporate server systems. Whatever Otellini has done in the last year is paying off and Intel has roared back this year after having the lowest chip market share in 11 years last year. AMD is going to have a very tough time this go-round with the resurgent Intel, that's for sure. It was probably a good move, then, for AMD to gobble up graphics powerhouse ATI when it did -- as the company will need that business now more than ever.

Intel Corp. (NASDAQ: INTC) continues to beat up on beleaguered smaller rival Advanced Micro Devices, Inc. (NYSE: AMD), and the world's largest chip maker has now upped its outlook for the third quarter, as laptop computer sales increase and Intel takes back some market share it lost to AMD in 2006.

Intel's third quarter revenue outlook is $9.4 billion to $9.8 billion, up from its earlier projection of $9.0 billion to $9.6 billion. Intel also stated that it expects gross margin to be about 52% in the quarter. With analysts already pegging Q3 sales at $9.33 billion, this increased outlook from the chip giant is great news for investors, although CEO Paul Otellini did not expand on the specifics around the increase other than to hint at increased forecasts of PC shipments for the quarter.

This makes sense, as Intel's rising market share will sail along with those increased shipments if in fact they materialize as forecast. But remember, the holiday shopping season is coming up, and the consumer segment is the hot one in PC sales right now, not the corporate segment. Come holiday shopping time, laptop shipments are set to blaze once again. Add in Apple Inc.'s (NASDAQ: AAPL) growing Mac sales -- which now all ship with Intel chips -- and there you go.

After Intel gained about 6% of share from AMD in the first quarter of 2007, the company regained enough of the market to pin AMD with the lowest market share in more than a decade. Intel's Core Duo chips are increasingly shipping in mid-range and higher-end laptop systems, even with AMD's Turion dual-core chips in the same market segment and shipping with all major laptop brands. Come October 16, we'll see how Intel fared in the current quarter, but right now the chipmaker's return to former glory is definitely on track, much to the chagrin of AMD.

At last, the "Pentium" name is going away from the microchip and computer landscape after more than 10 years in existence. I remember having a PC powered by I think the first Intel Pentium -- a Pentium 60 (Megahertz). My, have things changed for the faster. Intel CEO Paul Otellini officially took to the stage to show off the Pentium successor, the Intel Core 2 Duo.

This new microchip architecture should help put Intel back on the performance map against smaller rival AMD, which has beaten up Intel lately with much faster chips and a kind of "underdog" status that has won it marketshare from almost every angle. When AMD announced its plans to buy video chipmaker ATI for $5.4 billion just last week, the assault is now on with Intel releasing the Core 2 Duo to challenge AMD's perceived speed advantages.

Intel needs a showstopper in the Core 2 Duo package in order to reverse some problems with aging Pentium designs (which are now retired) and to put it back on track to consistent, excellent growth. While recently axing 1,000 managers and re-arranging multitudes of its business to slash costs, Intel's timing on the new flagship consumer/business chip product could not have been better.

Google shares posted higher in the game today, closing up at $376.20, a positive jump of $2.07 from Friday's close. While some lament the demise of the PC industry, at least Bill Gates and Paul Otellini don't think the PC is doomed as the consumer and business computing market evolves -- and Google would have to agree with them, seeing as though advertising displayed on PCs is the largest source of their revenue.

While the Fool hints at the sordid side of search engines, a market which Google leads, I can't help but figure that if anything, search engines are going to make consumers smarter over the long haul, as in the Wisdom of Crowds theory. Yes, search engines can invariably lead to online nastiness like adware and spyware websites -- hey, Google does index everything -- but over time, consumers will wise up to these facts and Google will have tools available to warn its search customers -- and it does this already when you search if you have Google Desktop installed.

So, the moral of today's story is that the personal computing market is far from dead and the search engine market is not going to precede the destruction of the planet. Invest wisely, my friends.