Rumor: Dell May Purchase AMD
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."
I 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.
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.
You think Intel wouldn't be furious if they lost the Dell market? It will get challenged hardcore.
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.
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...
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.
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)
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