BOSTON (CNN/Money) - When I think of AMD investors of late, I'm reminded of that old joke "Take my wife ... please."

Desperate as they are to get AMD to dump its money-losing flash-memory division, on Thursday investors bid up shares 6 percent on rumors that the company was doing just that. The stock price rose despite new rumors that same day that Dell wasn't planning to buy AMD chips.

Then Friday morning brought the news: AMD wasn't selling its flash unit, and Dell didn't want AMD chips. It's hard to tell which information hurt more, but investors continued to push the stock up anyway.

It makes no sense. You'd think this would be the perfect time for AMD to make inroads with the biggest PC maker.

AMD's Opteron server chip is lauded for its price and performance, and while its percentage of the server market is small -- 6.5 percent in the fourth quarter of 2004, according to new numbers from IDC -- it has grown from 3.5 percent the previous year. The increase is due in part to AMD's fine engineering but also to the market's struggles with Intel's Itanium server platform.

"AMD caught Intel pretty good with Opteron," says David Wu, an analyst with Global Crown Partners. "If AMD can't beat Intel with Opteron, I don't know if they ever will."

If that's true, AMD doesn't stand a chance of winning over Dell. Wu notes that there are powerful incentives for a computer company to remain an Intel-only shop: preferential pricing, priority in case of product shortage, and help with research and development. He says Dell likely used Intel's recent stumbles with canceled products and missed deadlines "to extract an extra pint of blood from Intel."

And given Intel's setbacks, you'd think AMD could make a strong case for itself with Dell. But some analysts believe the chance to break into Dell's supplier chain has passed.

"The opportunity for AMD with Dell was a year ago," says Hans Mosesmann, an analyst with Moors & Cabot. "Last year Intel was a disaster. This year it's not the case, and you can't assume that Intel is going to continue to screw up."

AMD's failure to lure Dell is overshadowed by concerns regarding its troubled flash-memory division, which currently accounts for 40 percent of AMD's revenue and was a star for the company from 2000 until the flash market tanked in 2004.

AMD CEO Hector Ruiz didn't exactly alleviate concerns when he called his company's fourth-quarter flash performance "freaking dismal."

Eric Ross, an analyst with ThinkEquity Partners, believes that the flash division's losses will diminish the positive impact of the share gains from servers and desktops.

"In 2000 flash was a huge contributor to AMD's earnings," Ross says. "In 2003 it was a contributor as well, but if pricing continues, it will be a drag for the company, and there are no natural buyers of the AMD flash business."

"They have to find a very rich, drunken buyer," Wu says. "The buyer must be drunk. Anybody who has good sense is not a buyer of AMD's flash business."

All of which translates into tough times for AMD investors. That which once brought glory -- the company's flash division -- now brings pain.

Until AMD finds a buyer or a turnaround strategy for its flash division or decides to split the company in two along product-division lines, it will experience earnings dilution and suffer Wall Street's wrath. The stock has risen 16 percent in the month and a half since AMD announced trouble in Flashland, and there's no real news to justify that increase. Investors are advised to sit this ride out.

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