AMD buying ATI ?

[Typhoon]

Quote:

 

"Advanced Micro Devices, the worldʼs second largest maker of microprocessors, reportedly has reached agreements with ATI Technologies in regards the acquisition of the latter. No details are known, but this is the second time when rumours concerning the acquisition break out in the last several weeks.

 

“On the July 4, a person close to the negotiations revealed that AMD has reached a purchase agreement with ATI, the news will soon be officially announced,” a news-story at Chinese web-site Sohu.com reads.

 

Early in June an analyst with RBC Market Capitals said that he would expect AMD to acquire ATI Technologies, as he thought it was consistent with AMDʼs plans to expand capacities. Acquisition of ATI would give AMD a strong team of engineers and rich product portfolio not only consisting chipsets and graphics processors, but also chips for consumer electronics, mobile phones and even technology licensing agreements with Microsoft Corp. and Nintendo. But while AMD would gain ability to offer all-in-one platforms, like Intel Corp. does, acquisition of a quite a big company may impact AMDʼs ability to spend on boosting its manufacturing capacities or developing new technologies.

 

There a lot of differences between AMD and ATI as well. If the former has been concentrating on development and manufacturing of microprocessors, gradually withdrawing from any other markets, the latter has been trying to enter broader markets with its various products, which are built by third party manufacturers, such as Taiwan Semiconductor Manufacturing Corp. (TSMC) or United Microelectronics Corp. (UMC).

 

At press time ATIʼs market capitalization was $3.83 billion, market capitalization of AMD was $11.54 billion. Meanwhile, ATI had $607.03 million in cash, while AMD, who has been enjoying performance lead over Intel Corp. for several recent quarters, had $2.63 billion in cash.

 

ATI denied to “comment on rumours”."

 

http://www.xbitlabs.com/news/video/display/20060707020733.html

[privateer]

AMD Said Near Deal to Buy ATI

 

http://www.eweek.com/article2/0,1759,1992964,00.asp?kc=EWRSS03119TX1K0000594

[privateer]

AMD Nearing $5.5 Bln Deal To Acquire ATI Technologies - Update

 

Saturday, July 22, 2006; Posted: 06:32 PM

 

(RTTNews) - On Saturday, Advanced Micro Devices Inc. (AMD | charts | news | PowerRating), said that its bid to acquire the graphics chipmaker ATI Technologies has been progressing significantly. The deal is expected to close for nearly $5.5 billion. Reports suggest that on completion of the transaction, AMD would become self-reliant for graphic chips and see itself on traction with its rival Intel.

 

The company noted that, going by the asking price, it might have to offer a major part of its own shares to ATI or take on debt. The deal, which is expected to be announced shortly, would have its negative impacts on Nvidia, the Silicon Valley firm currently providing graphic chipsets to AMD. Even though, both Nvidia and ATI cater to AMD's graphic chip requirements, in future AMD is likely to entirely shift to ATI. Another major development anticipated after the acquisition is ATI, who currently provides third party chipsets to Intel might have to drop that contract in future.

 

Market analysts have been speculating that superior microprocessor companies could buy the graphics chipmakers. However the feasibility of such deals remains at stake, considering the recent divesture of Intel's chip division for mobile phones. Anyhow, to remain in competition, AMD should strive to match its graphic abilities with Intel.

 

AMD ended its last trading at $18.26, down $3.39 or 15.66%, on a volume of 41.37 million shares. In after-hours, shares of the company dipped further $0.35 or 1.92% and traded at $17.91.

 

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[privateer]

AMD + ATi: One + One = Three

 

I am busting at the seams here, I have been holding my opinions on this potential ATi + AMD deal for many months now. Obviously everyone knows Intelʼs latest product offering is excellent and news on Conroe/Woodcrest is humming along – but this deal with ATi + AMD has positive cataclysmic effects on the entire industry. This deal slightly overshadows any news going on in our industry at the moment.

 

I am going out on a limb – I, like many others, believe this deal is imminent and I am offering up my reasons why I believe this deal makes sense.

 

As many of you know I have always said that ATi is a target for acquisition, and I truly believe they are a diamond hidden deep in the rough – and with a little bit of polishing this acquisition will go down in history as the best move that AMD ever made. ATi + AMD = a go big strategy that will shake the very foundation of our industry.

 

Based on the feedback Iʼve received from many analysts, I am going to assume that most people will not be able to make sense of this deal. The following obvious questions come to mind;

 

1) Why would AMD buy ATi, why not Nvidia? Isnʼt Nvidia a stronger company?

 

The answer this question requires some methodical strategic thought. This is not unlike a chess game – and I believe that AMD is positioning its pieces carefully before it works its way over to the king.

 

- ATi is generally undervalued. They have been trading in a tight little window for what seems like forever. ATi does not have the market prowess that Nvidia has; quite simply Nvidia knows how to manage their relationships with Wall Street better than ATi does.

 

- ATi is very much like AMD was 5+ years ago before the new AMD management came on board and started to fix the company. Under Hector Ruiz, new management leveraged the awesome innovations that AMD had under the hood and turned the company on its head. For the last 3+ years AMD has been the undisputed leader in almost all areas of the market.

 

- ATi has some killer technologies under their hood – not least of which are publicly available now. ATi is the best third party notebook chipset manufacturer in the world. They understand power management like no ones business, and they have the capabilities to build killer platforms for mobile platforms. There is no denying that the Intel Israeli team is talented when it comes to designing some killer platforms - especially for notebook. ATi + AMD under one roof = mobility platforms that will rival anything that anyone else can put out.

 

- ATiʼs handheld business is strong and AMD has some great OEM relationships to help raise this portfolio.

 

- No need to talk about the benefits of XBOX 360 + Nintendo Wii, I think you all know what this translates to.

 

- ATiʼs decentralized organization could use a big tune up. They are very easy to work with, and they are incredibly flexible – this acquisition will come as a welcome challenge to their team.

 

- ATi has polished their skills in platform chipsets, and with a little bit of honing they could be the next big force in the market. With AMD building their own platforms “in house” via ATi I think weʼll see some pretty amazing pre-engineered products.

 

- Itʼs not the time for Nvidia yet: If anyone knows Nvidia they know that their CEO is very much in control of the organization. Nvidia is also much more expensive than ATi, and rightfully so – Nvidia has been making all the right moves for many consecutive months. Nvidia is known for their aggressive business moves, and those who know Jen-Hsun will tell you that he wouldnʼt let anyone buy the company without him remaining at the helm of the larger organization. Think about the future opportunities here –- We could see the beginnings of a much larger organization.

 

2) Why is AMD fixated on the graphics market?

 

Long term thinkers already know that CPU and GPU computations may eventually end up on one piece of silicon. Back in the days of the separate math co-processors industry “pundits” didnʼt believe they would ever morph into one – but those in the know realized that this bottleneck needed to be cut out as soon as possible. In the case of CPU + GPU the possibilities are endless – imagine a multi-core piece of silicon where one core handles massive CPU computations while another handles graphics, and perhaps another handles the traffic between the multiple cores.

 

3) Will Nvidia react negatively and work exclusively with Intel?

 

Hardly. There is no way that AMD will alienate Nvidia. In fact I am quite confident that Nvidia will actually work closer with AMD, and perhaps share and co-develop graphics in the long run. There are no egoʼs at AMD or ATi – if they feel itʼs good for their shareholders and their customers to work closer with Nvidia they will do it. AMD knows part of the reason for their success is the fact that they offer choices to their customers. Also, the worldwide demand for chipsets is higher than what ATi could produce so obviously Nvidia will still play a major role in AMD based machines.

 

AMD has some great platform solutions slated for next year, including server, workstation, notebook, etc. I canʼt get into too many details, but in my mind AMD + ATi = one large company with the potential of becoming a massive juggernaught. Any debt that AMD incurs to make this transaction a reality will be short lived. The long term outlook on AMD is unbelievable if this deal is approved – this company will go big, and those along for the ride are going to reap huge rewards.

 

As usual, initial reactions to change are always negative - but long term thinkers who truly understand the technology will tell you this deal is the one way that AMD can turn the tides in their favor.

 

On another note, someone needs to write a book on AMD, Iʼm telling you it would be a best seller. The management over at AMD really understands the future of technology and the needs of their customers. I think a book about how they did it would be a very interesting read.

 

I welcome any and all of you to visit my blog at http://www.rahulsood.com for more details on this transaction as it progresses – and I welcome all comments on all sides of the deal.

[privateer]

AMD confirms ATI acquisition

 

Chip maker borrows $2.5 billion to 'transform the industry'

 

http://www.theinquirer.net/default.aspx?article=33223

[predalien]

Από http://www.amd.com/:

 

On July 24, 2006, AMD and ATI announced a plan to join forces, in a transaction that will combine AMDʼs technology leadership in microprocessors with ATIʼs strengths in graphics, chipsets and consumer electronics. The result is a processing powerhouse: a new competitor, better equipped to drive growth, innovation and choice for its customers in commercial and mobile computing segments and in rapidly-growing consumer electronics segments. The transaction, valued at US $5.4 billion, is expected to close in Q4 2006 subject to approval by ATI shareholders, court approval, regulatory approvals and other customary closing conditions.