AMD Board approves 5.6 bil purchase of Ati !!!!

[LordPope]

http://www.tgdaily.com/2006/07/21/amd_to_swallow_ati/

AMD to swallow ATI for $5.6 billion?

Wolfgang Gruener

July 21, 2006 17:19



Chicago (IL) - Rumors about an upcoming Amd bid to acquire chipset company and grphics chip develop AMD have resurfaced on Friday. According to an article published by globeandmail.com, AMD could make a friendly offer as early as next week. The website referred to sources, which suggested that AMD is considering a $5.6 billion takeover bid.

AMD's board apparently has approved a takeover offer, "according to an investment banker familiar with the talks."


ATI's shares were traded at $16.56 late Friday, up $0.83 or 5.3% for the day. At the current stock price, the company is valued at a market capitalization of $4.2 billion. AMD traded at $18.26, down almost 16% for the day as a result of a rocky second quarter.

Considering AMD's current balance sheet, a takeover of ATI could be a significant stretch for AMD. The company has just about $2.5 billion in its warchest, which would mean that a the majority of the speculated takeover amount will consist of AMD stock.

It is unclear at this time what benefits the addition of ATI would bring to AMD's business. Graphics as well as chipsets diversify AMD's business, but are also viewed as potential distractions from the firm's core business. The fact that ATI is currently shipping low-end chipsets to Intel also appears to be not a convincing reason for AMD to shell out more than $5 billion for the Canadian company.

At this time, ATI also does not appear to be an attractive takeover target in a financial view: The firm currently holds assets valued at about $1.35 billion - $166 million of that in cash - and recent quarter earnings were just above $32 million. In comparison, ATI rival Nvidia has products that have closer ties to AMD's products. Nvidia is currently valued at about $6.3 billion and reported net income of $91 million in its most recent quarter report.

 

[The_Abyss]

You've already posted this - clearly you're over-excited.

 

[LordPope]

people shot it down cus it was a INQ rumour

now its popping up all over the web as a done deal

 

[voxel]

Looks like AMD is serious about GPUs and PPUs within HyperTransport / Torrenza-sockets or they want more say/power/money in the chipset world.

I heard it first here:

http://biz.yahoo.com/rb/060721/ati_amd.html?.v=2

 

[LordPope]

http://www.washingtonpost.com/wp-dyn/content/article/2006/07/21/AR2006072101237.html

AMD said near $5.5 bln deal to buy ATI

By Jessica Hall
Reuters
Friday, July 21, 2006; 8:07 PM

PHILADELPHIA (Reuters) - Advanced Micro Devices Inc. <AMD.N>, the No. 2 supplier of computer processors, is close to a deal to buy graphics chip maker ATI Technologies Inc. <ATYT.O> <ATY.TO> for $5.5 billion, a source familiar with the situation said on Friday.

Such a deal would shake up the processor industry, which is witnessing a tooth-and-nail fight for market share between AMD and larger rival Intel Corp. <INTC.O>. AMD would gain one of two major graphics chips makers, the other being Nvidia Corp.

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<NVDA.O>.

Markham, Ontario-based ATI is also a big supplier of chipsets -- the cluster of secondary chips and interfaces that surround a computer's processor -- for AMD and Intel products.

Unless talks break down, a deal could be announced as early as Monday, the source said.

ATI and AMD both declined to comment.

Since rumors of a deal first emerged in May, many industry analysts have voiced skepticism, saying it made little financial or strategic sense for AMD to buy ATI outright.

One concern is that the price would be too high for AMD, which already plans to spend $5 billion on capacity in the next few years, even as it fights a bruising price war with Intel.

"It would be a very dilutive acquisition and they don't want to spend their cash because they are going to need that for capital expenditures going forward," said one analyst at a U.S. research firm, who declined to be identified.

Graphics chips are also less profitable than PC processors. Gross margins in the business are about 45 percent, compared to 55 percent for main processors.

A tie-up with ATI could raise concerns that AMD would shun Nvidia, and potentially clash with a new AMD initiative called "Torrenza" that will open up its technology so other chipmakers can make their products work better with it.

Shares of ATI rallied on Friday on belief that a deal was close at hand. After gaining 83 cents, or 5.3 percent, to close at $16.56 on Nasdaq in regular trade, they jumped another 7 percent to $17.68 in after-hours trading. On the Toronto Stock Exchange, ATI finished 99 Canadian cents higher at C$18.77.

Rumors that Sunnyvale, California-based AMD could buy the Canadian chip maker surfaced in late May when an analyst suggested the move could make AMD more competitive with Intel.

But AMD shares finished down 15.7 percent at $18.26 on the New York Stock Exchange as investors worried that the company would not be able to continue taking market share from Intel.

Others wondered why ATI speculation received no attention from analysts on AMD's earnings conference call on Thursday.

"The most surprising thing with these results is the fact there was not even a question about ATI on AMD's call," Scotia Capital analyst Devan Moodley wrote in a research note.

 

[The_Abyss]

people shot it down cus it was a INQ rumour

not its popping up all over the web as a done deal

No, I mean you've already posted this news several times on this forum.

Don't you dare have the audacity to quote the Inquirer as being the source for the scoop on this.

Go on, go back on all of their headlines, follow them up and see how true they are. You'll be banned for spamming before you post another thread that has a true story in it.

 

[Grimmy]

:? . o O (does this really need to be shown.. twice?)

 

[LordPope]

the orginal thread was shot down as INQ CRAP

so i had to seperate it now that major news sites are reporting this

 

[LordPope]

why are u upset about this?

 

[K8MAN]

Wow it looks to be really happening. I wonder if Intel will turn around and buy nvidia out of spite :lol:

 

[LordPope]

this is serious news

think of the implications?

 

[Grimmy]

Well... implications?

To shun Nvidia out.

Less profit made on GPU's.

Amount spent buying ATI out.

Stock investers say AMD may no longer continue taking market share from Intel.

 

[The_Abyss]

Because it is the 2nd thread you've started on the same story, and about the 20th post on the same story.

Repeating stuff like this pushes more important stuff off the forum front page, like the new thread about the sun coming up again tomorrow.

 

[voxel]

Stock investers say AMD may no longer continue taking market share from Intel.

On the server side, the damage is done. Even thought Woodcrest is better performer, Xeon is four-letter word right now. HP guys that came into my company were touting Opterons for our render farm upgrade (usually a few hundred thousand dollars). It takes 6 months for products to rollout + stabilize from first CPU shipment.

On the desktop side, Conroe will rule.

Disclaimer: I own the same amount of AMD and INTC stock.

 

[The_Abyss]

Deleted by Moderator

So that is the level that we have to aim for then? You're a model example of what to aim for....

Reported.

 

[Caboose-1]

What the hell is wrong with AMD? I can't believe this; I now despise AMD. I used to love ATi, no more. This is complete bullshi7.

ATi being purchased by AMD: Five point six billion dollars.

Realizing every fanboy (in this case, me) has limits to his devotion: Priceless.

This is a sad day.

 

[LordPope]

you sound like BARON

he hates this too


i like it just for the fact of the crazyness this causes

its a great day to be a nerd

 

[Caboose-1]

I was really only a fanboy of ATi, obviously no longer. When it comes to processors, who makes it doesn't matter to me, but I now hate AMD.

 

[LordPope]

if u hate AMD...there are legions of INTELLIOTS here will name you their king.

 

[Caboose-1]

Okay, lets get this straight. Just because I now hate AMD doesn't mean it will taint my recommendations or posts. I refuse to associate myself with those idiots.