“It was the best of times, it was the worst of times.” That pretty much sums up the situation with Intel Corp. and AMD. Based on their latest financial reports, the two x86 chipmakers are on very different trajectories. In the latest quarter, AMD lost almost as much money as Intel made. That’s bad news for AMD investors since Intel made a ton of money in the last 3 months.

Oh, and along with AMD’s dismal earnings report released today, the company also announced a new CEO. But first, the numbers.

Intel continued to please investors this week with its latest quarterly earnings report. The company reported $1.6 billion in profits for Q2 of 2008, a 25 percent year-over-year increase. Total revenue for the quarter hit $9.5 billion. AMD meanwhile reported its seventh consecutive quarter of red ink, recording a whopping $1.19 billion loss in Q2. Fortunately most of the losses were one-time hits, including a $920 million loss from discontinued operations. There was also a $30 million charge for “restructuring,” in this case severance pay for layed-off workers. Earlier in the week, AMD said it would be shedding about 10 percent of its staff (1,600 workers) over the next three months.

Of course, this latest news didn’t occur in a vacuum. Intel has been on a tear for the last couple of years, ever since it re-architected its x86 line and jumped a process technology node ahead of rival AMD. With Intel’s lastest 45nm processors, the chip giant has truly found a money-making machine. The company expects to deliver its 100 millionth 45nm processor before the end of 2008.

In the same timeframe, AMD executed poorly on several fronts. Its 2006 acquisition of ATI went badly, disrupting both the x86 and ATI GPU product lines for some time. The ill-fated quad-core Barcelona release in late 2007 inflicted additional pain on the company. Also, the company’s ATI Consumer Electronics division has performed poorly — so poorly in fact that AMD is divesting itself of the business. In fact, the majority of the Q2 losses reflect the $876 million write-down the company made against the ATI Consumer Electronics division, although AMD offered no details on how this will shake out.

And while Intel has been shipping buckets of 45nm chips, AMD is still ramping up its 65nm product lines. The company’s current plan is to get the first 45nm products out the door by Q4, which is three months later than originally planned. But let’s face it, the original plan was hopelessly optimistic. Obviously the 45nm delay isn’t going to help AMD in the high-end server space.

At the high end in general, and in HPC in particular, Intel has regained mindshare from its rival, eroding AMD’s technological lead by getting its quad-core Xeons into the hands of users a full year before the quad Opterons hit the streets. With the upcoming Nehalem processors due out later this year, Intel will have brought its bus and memory controller architecture more in line with AMD’s, eliminating the latter company’s largest remaining technological advantage. Further down the road, Intel’s manycore Larrabee architecture and its terascale research work should keep the company’s x86 line front and center in the HPC market for the foreseeable future.

It may not all be smooth sailing for Intel, however. On Thursday, the European Union expanded their antitrust investigation against the chipmaker. This time the EU regulators accused the company of suppressing competition by offering rebates to a European PC retailer if it would sell Intel-only gear. Intel has eight weeks to respond in writing or to request a formal heaing. If Intel is found guilty of wrongdoing, the EU fines could be substantial. Microsoft was recently fined $1.3 billion for violating European competition laws.

It’s not all gloom and doom for AMD, either. The quad-core Opteron chips are back on track and they’re said to be selling well, especially in the four-socket space, where Intel is still at a disadvange. This week TACC upgraded its half-petaflop Ranger super with faster 2.3 GHz Opterons to boost the machine’s raw performance by another 75 teraflops. The original processors were all 2.0 GHz. According to TACC, AMD gave them the 16 thousand new Opterons gratis, with Sun donating time to do the installation. A little good PR never hurts.

And despite the rocky start with the ATI merger, things are looking up for AMD on the GPU front as well. The latest ATI graphics gear, the Radeon 4850 and 4870 cards, is getting glowing reviews from the GPU digerati and should play well against NVIDIA’s current offerings. The two Radeon cards offer teraflop-level performance at mid-range prices ($200-$300) with very reasonable power consumption (110-160 watts). Both products are based on the RV 770 processor, which is the same GPU used in the FireStream 9250 HPC product announced last month.

One big issue that remains to be resolved is AMD’s “Asset Smart” strategy, which refers to the company’s intention to reduce its investment in the chip manufacturing side of the business. During the quarter it sold one of its older 200-mm facilities for $193 million, but it is widely assumed that AMD wants to systematically reduce its exposure to fab costs through some sort of facility sharing arrangement with other vendors.

AMD’s problem is that its competition is so much bigger than it is. Intel’s chip volumes are a better fit for in-house manufacturing than AMD because of the expense of developing, building, and operating these fabs. In fact Intel’s manufacturing prowess has become a big competitive advantage over its smaller rival. If AMD gave up more control over manufacturing, it risks slipping further behind Intel in chip production competitiveness. AMD is in a tough spot here and will have to think outside the box.

To that end, the AMD board has decided to develop the new strategy under new leadership. The board swapped out its CEO, tapping COO Dirk Meyer to take over as the company’s new chief exec. He replaces Hector Ruiz, who will become executive chairman of AMD and chair of the board of directors. While the move has been expected for some time, switching CEOs in the midst of financial turmoil probably wasn’t part of the original plan.

Meyer will certainly have his hands full for the remainder of 2008. With the company stock hovering at around $5 a share and the economy in the tank, the next six months are going to be tough going for the chipmaker. AMD is still touting its intention to get back in the black in the second half of the year. If Meyer manages just to fulfill those low expectations, the investors will love him.