Shares of Advanced Micro Devices surged more than 24% early Thursday after it announced a billion-dollar settlement with its bigger, computer processor rival Intel.

Intel, which agreed to abide by a set of business practices provisions, will pay AMD $1.25 billion. The two companies will also obtain patent rights under a new five-year cross-license agreement.

The settlement looks like a clear win for AMD, which has been claiming for five years that Intel was breaking antitrust laws. "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development," the companies said in a joint statement.

The news comes a day after AMD s analyst day, which Thomas Weisel analyst Kevin Cassidy described as upbeat. We came away positive on the aggressive 2010 goals set by the company's new CFO, which we view as achievable if dynamics play out favorably, Cassidy wrote.

Wedbush Morgan analyst Patrick Wang was slightly less moved by the meeting, remarking that we come away incrementally more positive on the product roadmap but remain unchanged on its financial trajectory.

The bottom line: The settlement certainly doesn t hurt AMD s financial trajectory.

Brocade Communications Down

Network equipment maker Brocade Communications was stung by Hewlett Packard s announcement late Wednesday that it would buy 3Com. The deal not only sidelined Brocade as a potential acquisition for HP and directly challenges Cisco (CSCO), it also puts further pressure on the smaller players in the space.

This transaction is clearly a function of HP's desire to strike Cisco in its sweet spot, as Cisco has done to HP in servers, writes Cannacord Adams analyst Paul Mansky. The degree to which either are materially successful in their efforts will not be definitive for years and there will be several milemarkers along the way. That said, the starter s flag has now officially been waved.

The deal was met with a string of downgrades from Piper Jaffray, ThinkEquity, and Lazard.

With a new formidable competitor in the form of HPQ entering the Ethernet Networking business, we believe the business is likely to be incrementally less attractive from an earnings-power perspective for all participants, including BRCD, wrote Think Equity analyst Rajesh Ghai.

However, other analysts were less discouraged.

For Brocade, it limits the opportunity to partner with a large server OEM, but we still think Brocade-Foundry has a very competent product portfolio and sales team to effectively compete against larger IT vendors, wrote Jeffries analyst Munjal Shah. The analyst has a buy rating and continues to like Brocade for its improving fundamentals.

Cannacord Adams Paul Mansky also kept a buy rating.

The bottom line: It s hard to tell how this will play out or how long it will take, but by striking Cisco in its sweet spot HP clearly disheartened Brocade investors.