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Rumor: Dell May Purchase AMD

By - Source: WSJ | B 85 comments

AMD's inner-turmoil may have positioned it as a prime target for an acquisition by Dell or companies.

Monday AMD saw a sudden 4.2-percent rise in share value by 4pm in New York Stock Exchange composite trading, jumping 35 cents to $8.63 per share. The increase was reportedly due to speculation that AMD may be a take-out target for Dell or other OEMs looking to purchase the nation's second-largest CPU manufacturer.

Currently AMD may be conceived as a prime target. Back in January, Chief Executive Officer Dirk Meyer stepped down from his position after fighting with the board over the company's lack of products in an expanding mobile computer market, and its overall lack of progress in regaining lost shares of the server market. For now Financial Officer Thomas Seifert is acting as interim CEO, but he made it clear he doesn't want the position to be permanent.

Then just last week Chief Operating Officer Robert Rivet and strategy head Marty Seyer announced that they were also leaving AMD. Although the reasons were not provided, it's speculated that the two decided to leave when AMD announced it would conduct an external search for the new CEO. Rivet and Seyer may have assumed that they would not be considered for the position, and quit.

Currently there's no solid proof that Dell is interested in purchasing AMD. As of this writing, the chip manufacturer is worth around $6.5 billion, making it a very hefty purchase. Patrick Wang, an analyst at Wedbush Securities in New York, said that there's no real management team at AMD. He acknowledged all the chatter surrounding the possible sale, but said that an acquisition by Dell is "a far-fetched possibility."

"There’s not a lot of color on the rumor at this point," added Tiernan Ray of the Wall Street Journal (Barron's) in a separate article. "Is Dell considering making a more integrated kind of product line? Talk about a change in strategy."

AMD shares may actually be rising due to the situation with Intel's Sandy Bridge chipset. According to Leslie Sobon, AMD vice president of product and platform marketing, the company has received hardware requests as a direct result of the issue. "We have some customers and retailers who have come to us specifically as a result of Intel's chip problem," Sobon said. "Some retailers have had to take things off their shelves, so they call us to ask what they could get from our OEMs that's similar. And OEMs are asking us for product, as well."

Despite the internal turmoil, stock may be rising simply because AMD is looking to gain more business thanks to manufacturers and retailers seeking out a Sandy Bridge alternative. Still, if Dell does pursue an AMD acquisition (and thus shuns Intel), the company would stand on firmer ground in its fight for market share against Hewlett-Packard, Lenovo and others system builders.

For now, file this whole Dell acquisition business under "RUMOR."

Discuss
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Top Comments
  • 18 Hide
    Anonymous , February 15, 2011 6:02 PM
    Good God no! Intel and AMD fanboys can put their differences aside here. I think we can all agree that Dell sucks.
Other Comments
  • 6 Hide
    someguynamedmatt , February 15, 2011 5:51 PM
    Yeah. No. Not happening.
  • -1 Hide
    jfby , February 15, 2011 5:56 PM
    I don't think that Congress would allow this to happen as it would give Dell an unfair advantage in market share and their ability to leverage AMD to their advantage against their competitors.
  • 7 Hide
    restatement3dofted , February 15, 2011 6:00 PM
    jfbyI don't think that Congress would allow this to happen as it would give Dell an unfair advantage in market share and their ability to leverage AMD to their advantage against their competitors.


    I take from your comment that you're an expert on mergers & acquisitions and antitrust law?
  • 18 Hide
    Anonymous , February 15, 2011 6:02 PM
    Good God no! Intel and AMD fanboys can put their differences aside here. I think we can all agree that Dell sucks.
  • 1 Hide
    ares1214 , February 15, 2011 6:04 PM
    Why the hell would Dell want AMD?! The rumour they may be bought out isn't entirely absurd, but dell?! No. More likely IBM, Samsung, some company that actually deals with CPU's. If this happens, the computer market, and probably Dell along with AMD may be screwed. On the other hand, Dell is the most popular OEM, AMD would gain huge market share, and therefore make enough money to fund a decent research program. That is if dell limits itself to only AMD. But still, not happening. Don't scare me like that! :lol: 
  • -1 Hide
    dconnors , February 15, 2011 6:08 PM
    Restatement3dofTedI take from your comment that you're an expert on mergers & acquisitions and antitrust law?

    You don't need to be an expert to see the forest through the trees, chief.
  • 3 Hide
    kilo_17 , February 15, 2011 6:09 PM
    Ugh AMD acquired by an OEM? No way!
  • 2 Hide
    Anonymous , February 15, 2011 6:10 PM
    I sure hope this doesn't happen...
  • 0 Hide
    of the way , February 15, 2011 6:10 PM
    Definitely scared by the title. Much less scared by the actual article.
  • -2 Hide
    alidan , February 15, 2011 6:11 PM
    jfbyI don't think that Congress would allow this to happen as it would give Dell an unfair advantage in market share and their ability to leverage AMD to their advantage against their competitors.


    no, its buissness, if anything they would go after intel.

    amd if i remember right is at best a 10% market share, cpu wise, no clue what ati is but im guessing less than 40%

    its not like dell is the leading computer manufacture, buying the leading cpu manufacture, and thorughtly killing any compititon.
  • -1 Hide
    descendency , February 15, 2011 6:12 PM
    Restatement3dofTedI take from your comment that you're an expert on mergers & acquisitions and antitrust law?


    You think Intel wouldn't be furious if they lost the Dell market? It will get challenged hardcore.
  • 1 Hide
    Jarmo , February 15, 2011 6:13 PM
    My guess? I'm glad you asked!

    Dell is milking Intel for some advertisement funding, better deals on chips and anything else they can! And Intel will pay as they cannot afford/dare to call the bluff, losing Dell as a customer would sting too much.
  • 0 Hide
    jonpaul37 , February 15, 2011 6:15 PM
    Please for the love of GOD! I hope this does not happen, Dell is horrible!

    Also, how funny would this be, seeing that a little while back, It was dell who was basically selling 95% intel products due to "rebates" tthat Intel was strong-arming at them and other OEM's... Now they will exclusively hold the AMD line if this is true, I'll believe it when i see it...
  • -4 Hide
    Thunderfox , February 15, 2011 6:16 PM
    What's in it for Dell? They limit themselves to second class processor performance and give themselves the responsibility of improving it in order to survive, and in the mean time the other OEM's have superior Intel hardware in them. Why would Dell want to enter that fight? As it is now all they have to do is watch to see who wins and then buy more of that side's product.
  • -3 Hide
    ta152h , February 15, 2011 6:17 PM
    This doesn't make sense on a lot of levels.

    Intel not selling Sandy Bridge in numbers shouldn't make people run for AMD. AMD is worse than Intel's two generation old stuff; a Penryn is still faster than AMD stuff. Nehalem is way faster. They would go there.

    What would this do to Intel's relationship with Dell? Would Dell be willing to damage the relationship with the premier maker, to get a low-end parts supplier? Would Dell's customers be OK with inferior products? Well, they have been, so maybe yes. But, they'd lose a lot of customers that want Intel, and Dell buying AMD would end their relationship with Intel. It would have to. How could Dell tell people to buy AMD when they themselves sell mostly Intel?

    Also, Dell is only a cardboard box maker. They have never been a technology company, unless you consider new cardboard composites technology. They are allergic to innovation, and the expenses it entails. Since AMD doesn't make motherboards, it's really hard to see how this makes any sense at all. On top of all this, it would spell the end to ATI, since competitors would not want to buy from Dell.

    Processors and GPUs need a lot of investment money. Dell buying AMD would lower, dramatically, market share because HP isn't going to want to buy from them, and other OEMs will be the same. It just makes no sense at all, on any level.

    Dell buying Centaur, and the chipset business from VIA might be worth talking about. But, AMD makes no sense.
  • 0 Hide
    ubergeek , February 15, 2011 6:22 PM
    nnnNNNNNNOOOOOOOOoooooooooooooo........
  • 1 Hide
    linford585 , February 15, 2011 6:22 PM
    An OEM buying out a chip manufacturer (while I am no expert in anti-trust litigation, so correct me if I am wrong) I believe would very much be allowed (its more of move towards a vertical monopoly, of which, are not illegal). Vertical monopolies entail a company buying up all businesses within its production line, and as long as a horizontal monopoly (the illegal kind) does not form somewhere within this line, there can sometimes be a lot of money to be made through this (although initially very expensive) business practice...

    A good example of a vertical monopoly in this case would be:
    Dell buys chip manufacturers to produce their own parts.
    Dell buys shipping companies to be able to ship all products themselves.
    (and so on and so forth)
  • 1 Hide
    Hatecrime69 , February 15, 2011 6:23 PM
    i'd be surprised if dell had the cash to buy amd, not to mention their nearly lineup is nearly all intel and i doubt intel would be willing to make a deal for their competition to sell their (admittedly) better laptop cpu lineup.

    If you ask me, this is just a 'news' article meant to spread rumors and screw with stock prices, i doubt dell would ever really consider such a thing
  • 4 Hide
    woshitudou , February 15, 2011 6:34 PM
    Passing around rumours, keep it classy Toms.
  • 0 Hide
    liquidchild , February 15, 2011 6:39 PM
    If dell buys AMD ill never buy a CPU or a GPU from them ever again....PLEASE DON'T...i can't roll with Nvidia, Id rather Buy a crapple then a Dell product.
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