AMD moved into a very strong position against its larger rival Intel (INTC) when it took the lead in creating the most powerful and efficient chips for PCs and servers in 2003. Revenue moved from $3.5 billion in 2003 to $5 billion in 2004. More importantly, the company shifted from an operating loss in '03 to a $222 million profit in '04. Just as its fortunes were improving, AMD made two awful mistakes. In July 2006, AMD bought graphics chip maker ATI for $5.4 billion, taking on a load of debt in the process. Management also started to talk about getting to a 40% global market share, at a time when it was holding about 25%. At this point AMD did have the lead against Intel in the product performance race. Then Intel dropped prices to fight back, and AMD took the bait. Its gross margins collapsed. CEO Hector Ruiz had put the company in financial peril by ruining its balance sheet with long-term debt from an acquisition which has yet to do AMD any good. He moved into a price war with a larger rival which was in better shape to weather poor margins. Perhaps worst of all, he failed to drive his engineers to maintain the technology advantages which were so critical to customers. Any one of the mistakes would have hurt the company. When the company was at the top of its game less than three years ago, AMD traded at $40. It recently hit a 52-week low of $5.31.