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AMD Hardware

AMD A Ripe Target For Buyout? 108

Posted by Zonk from the change-of-pace dept.
SpiceMonkey writes "AMD stock was up 6.74% on Monday on rumors that AMD is a prime buyout target. After their purchase of ATI, they've been pressed to maintain their aggressive policy of chip production increases. As a result, the AMD message board on Yahoo! is full of speculation on who has their eyes on the company. Many folks there think that IBM is the right buyer for the company. There's no firm word that AMD is even being considered for purchase, but it's certainly and interesting prospect."
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AMD A Ripe Target For Buyout? More

AMD A Ripe Target For Buyout?

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  • don't get exited: it's just about money, not tech (Score:5, Insightful)

    by chriss ( 26574 ) * <chriss@memomo.net> on Tuesday February 27, 2007 @08:59AM (#18166026) Homepage

    TFA does not talk about a buyout for technology reasons. No, IBM does not want to compete with Intel on the x86 market. This is about a private equity firm (aka a group with a lot of money) possibly trying to buy a large part of AMD. It's all about money, not tech.

    Why would they do this? They either believe that AMDs stock is undervalued (it slipped 12% since January due to $574 million forth quarter loss) or they expect the company to fare pretty good in the future. Any way, they'd make money. A third option is always someone believing the single parts of the company are worth more than the stock and breaking it up and selling them separately will be profitable, but AMD is not sufficiently diversified to make this likely.

    So what would happen if the rumors were true? Someone else would receive the bonus in the future.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      They either believe that AMDs stock is undervalued (it slipped 12% since January due to $574 million forth quarter loss) or they expect the company to fare pretty good in the future.
      Or they simply want to rape the company:
      http://money.cnn.com/2006/01/05/news/companies/pri vate_equity_dividends/ [cnn.com]

    • Re:don't get exited: it's just about money, not te (Score:4, Informative)

      by Anonymous Coward on Tuesday February 27, 2007 @09:43AM (#18166544)
      A private equity firm is unlikely to be interested in AMD. Private equity investors tend to focus on consistantly profitable companies in declining sectors, e.g. the recent buyout of a utility in Texas is a case in point. Utilities have a predictable revenue stream, and don't have fast-growing revenues. The profits are necessary because private equity investors don't have money: they are leveraged (i.e. are in debt), and use the profits to both finance the leverage and secure a return for their investors. The declining sector is important because it means the share price will be low.

      AMD has two things against it: it doesn't have predictable profits (game plan since the 90's: it releases a new product, is profitable, takes market share from Intel, Intel strikes back, AMD has losses) and it is in a sector which isn't necessarily in long-term decline (though things have been rough since the tech bust).

      If there is a buyer, I'd bet it'll be either another semiconductor company, or at least one with a signficant semiconductor interest.

      • yes & no (Score:1, Interesting)

        by Anonymous Coward
        The boom/bust cycle is fairly predictable and there is no reason to think it won't continue. Additionally, AMD is a good candidate for an LBO because one of the biggest issues facing the company is a lack of sufficient capital. If they had a private equity firm pump them up they could get in a better financial position and do a major expansion. AMD has proven they have the ability to go toe to toe with Intel, they just can't sustain the fight and thus fall back into waiting for the next boom. I think they a

      • Re: (Score:3, Informative)

        by afabbro ( 33948 )
        Private equity investors tend to focus on consistantly profitable companies in declining sectors

        Toys R Us, Hertz, Sungard, Neiman Marcus, Intelsat, Equity Office, Hospital Corp of America, Harrah's, Clear Channel, Freescale, Albertson's...and those are just the LBOs. Saying private equity "tends to focus on consistantly profitable companies in declining sectors" is just wrong. Look at Wilbur Ross - he exclusively buys turnaround prospects and everything he buys is losing money. Sungard, Neiman Marcus,

    • IBM does not want to compete with Intel on the x86 market.

      They are also unlikely to go into a business that is dependent on MS (x86 sales depend on Windows running on your processors). I am not suggesting that MS will make Windows NOT run on AMD, but they could do a Skype. They regard IBM as a competitor (in operating systems, databases, probably lots of other stuff) and a dangerous backer of the "Linux cancer".

      Yes, I do know they use a Power PC processor in the x-box, but that does nothing to give IBM

    • Re:don't get exited: it's just about money, not te (Score:5, Insightful)

      by Lord Phaeton ( 900928 ) on Tuesday February 27, 2007 @09:50AM (#18166638)
      Although in the past private equity firms have generally sought to buy firms with undervalued stocks, with the massive amount of money floating around today pe firms usually buy companies and extract value for themselves by leveraging the company (hence the term leveraged buyout).

      In this case, that would be a terrible idea. AMD's debt load is such that a firm would be unable to raise it significantly, but most importantly, AMD competes in a cyclical industry. Many are worried about the recent Freescale LBO because in a highly cyclical industry like semiconductors if the industry turns down and the leveraged firm can't make its debt payments, then it goes belly up.

      Considering all of these factors I think that an LBO of AMD is highly unlikely.

      • Re: (Score:2)

        by F34nor ( 321515 ) *
        I have to agree becasue private equity looks for money and AMD has never had any. Even when they were making better chips than Intel they couldn't turn it into real money and no one with real money is interested in bragging rights or over-clocking.

        So if its debt load is so bad is there a way to let it go bankrupt then pick the bones for it's IP?

    • A third option is always someone believing the single parts of the company are worth more than the stock and breaking it up and selling them separately will be profitable...

      Isn't that Richard Gere's character's job in Pretty Woman?

  • Barcelona will answer this question. (Score:5, Interesting)

    by lavid ( 1020121 ) on Tuesday February 27, 2007 @09:01AM (#18166054) Homepage
    It really depends upon how barcelona performs. It's been a long time since AMD spit out a new architecture and it will be interesting to see if they blew all their creative juices on the A64 arch 3 years ago.

    AMD would have to change their "x86 everywhere" rhetoric if they were to be bought out by IBM, that's for sure.

    • Re: (Score:3, Funny)

      by jimstapleton ( 999106 )
      Now I can't get the Queen song Barcelona out of my head (I heard it yesterday, then you make this reference)

      Thanks.

      Oh, and good point to.

    • Re:Barcelona will answer this question. (Score:5, Interesting)

      by arivanov ( 12034 ) on Tuesday February 27, 2007 @11:28AM (#18167880) Homepage
      Not entirely true. I remember seeing somewhere that the next Power will use hypertransport and share bus and IO architecture as well as being socket compatible with AMD. It should be able to slot into the same boards. All you will need will be to replace the BIOS with a PPC boot loader.
      Also AMD is not actually pushing x86 everywhere. It is pushing hypertransport everywhere. It has licensed socket and bus specs to various specialised chip shops and has said that it actually sees its CPUs occupying only a fraction of the sockets in the tomorrow datacenter. The rest will be occupied by specialised kit (power included).
      In fact, I would not be surprised if we see a chimaera which has PPC and AMD chips on the same MB in less than 3 years.

      • Re: (Score:1)

        by lavid ( 1020121 )
        I've seen many, many presentations by lead architects at AMD and the "x86 everywhere" is a direct quote from them.

      • It should be able to slot into the same boards. All you will need will be to replace the BIOS with a PPC boot loader.

        It'd be nice if you could run either chip with OpenFirmware (although I fear it'd end up being EFI instead).

        In fact, I would not be surprised if we see a chimaera which has PPC and AMD chips on the same MB in less than 3 years.

        I'll bet a mobo with an AMD CPU and an ATI GPU (both on Hypertransport) is even more likely than that.

      • Re: (Score:1)

        by Moochman ( 54872 )

        In fact, I would not be surprised if we see a chimaera which has PPC and AMD chips on the same MB in less than 3 years.

        IBM is already building a supercomputer that uses both Opterons and Cells.

        IBM to build Opteron-Cell hybrid supercomputer [zdnet.com]

  • Clever marketing scheme (Score:4, Funny)

    by 68030 ( 215387 ) on Tuesday February 27, 2007 @09:02AM (#18166078) Homepage
    And not a single cute anagram out of IBM, AMD, and ATI..

    Maybe "Mama Bid It" or "AM BitMaid" :(

  • Couldn't possibly be a pump and dump scheme.. (Score:4, Funny)

    by R2.0 ( 532027 ) on Tuesday February 27, 2007 @09:13AM (#18166222)
    After all, Yahoo is the definitive source for financial information.
    • esp the yahoo financial forums, so much dreck.

    • Re: (Score:2, Informative)

      by maxume ( 22995 )
      The article is from Reuters, and is presumably talking about Wall Street chatter. The Yahoo message board activity seems to be secondary to the article. It is interesting that people think people with enough money(and rapid enough access to information) to 'trade' would waste their time on Yahoo message boards.

  • IBM?? NOT!! (Score:5, Insightful)

    by Anonymous Coward on Tuesday February 27, 2007 @09:19AM (#18166274)
    You have to be kidding, IBM a prospective buyer? How on earth does that make sense? Why would IBM want to be in the Intel clone business? Do they need the extra fab capacity, no? Is there some IP that they might be after, highly doubtful that there is enough to warrant a purchase vs simply licensing it. AAMOF, I don't see any value that AMD could bring to the company compared to the rather large price they would have to pay to get it. IBM is just fine selling gazillions of PPC based chips to video game manufacturers and doing their other custom IC work.
    • I don't know, AMD have some quite nice ideas for scalable multiprocessor based designs. I can see a lot of milage with IBM looking to cut 'back in' to the desktop business, and AMD would benefit a lot from some of the PPC based coolness IBM can do these days.

    • Re: (Score:2, Insightful)

      by Anonymous Coward
      It seems like IBM is at a crossroads in the semiconductor business, similar to about 10 years ago. Itanium failed like IBM said it would and they were right to stick it out.

      Should they stay in it or should the get out? They make wonderful products, they've got volume customers but I don't know if that's a business you stay competitive in if it's not your core vision. IBM simply makes chips because there aren't chips that are good enough to do what they need to sell their solutions. Buying AMD makes

      • Well POWER has some special virtualization abilities that currently don't exist in Intel or AMD. And there are unusual addressing modes that make sense in a mainframe, but not in a Unix/Windows style kernel. PowerPC is basically all these weird and specialized operations taken out (and a few added/changed), PowerPC is designed basically to run Unix-like OSes (including VMS-like OSes).

        PowerPC can't run z/OS or OS/390, and neither can Intel/AMD.

        IBM still pulls in money selling mainframes, and they will contin

      • Re: (Score:1)

        by Moochman ( 54872 )
        I agree with you, except for the bit about Sun. Because you forgot to mention the most important thing IBM brings to the table: fabrication technology. AFAIK their fabs are on a par with Intel's, or at the very least very close to being so. AMD's fabs, meanwhile, have lagged behind for years. With a combination of IBM's fabs and AMD's designs, plus the fact that IBM already bases a lot of their products on Opterons (blades for instance), I think such a deal would actually make a lot of sense. Finally a
    • AMD and IBM have a long term joint development business that started in 2003 and goes through 2011 to develop IC processes down to 22nm. It would be silly for IBM to purchase AMD when they are still shedding divisions (Lenovo, their hard drive division, etc).
  • 'investors' unrelated to the field buys companies, as this is about money they try to push the company to the extremes to reap off max profit, and when they got enough profit in short time duration in expense of making the company go bust, they sell it and jump to another company.

    'buyouts', 'mergers', 'acquisitions' should be banned from business world. All corporations have to go instutitional, in which noone can control 51% share, but a wide board and ceo that are chosen by majority stockholder vote ru

    • 'buyouts', 'mergers', 'acquisitions' should be banned from business world. All corporations have to go instutitional, in which noone can control 51% share, but a wide board and ceo that are chosen by majority stockholder vote rules the company.

      You sir, sound like a dumb ass. "All corporations"? You must mean all PUBLIC corporations? I assume you do since, I don't want my corporation which I own 100% of to go "instutitional" which sounds dangerous. Perhaps I am the dumb ass for responding to you, since "noone" in their right mind could take you seriously, but here goes...

      Mergers, buyouts and acquisitions are paramount to the business world. It allows for companies to do greater things. I couldn't imagine where the US would be if the great

      • I'd like to point out, aside from the great national developmental things they made happen in the past,

        railroads are just the bright shiny ideal model of a succesful industry today aren't they?

        next time try the phone company, or oil.. they at least are empirical..

        I'll grant you, m&a is constantly slammed for slicing apart businesses and putting a lot of people out of work, but the fact is- it also makes businesses leaner and more survival oriented...

        and yes, I'm jealous, I only have 90% ownership of my

        • Re: (Score:2, Informative)

          by Skater ( 41976 )
          Actually, railroads, at least in North America, are quite successful these days. Profits are up, track utilization is very high, and the industry is quite strong. They're pulling business from long-haul trucks, and moving containers by the thousands. Their biggest risk now is becoming victims of their own success, since they can't build enough new track to ease already overburdened lines (every time they try, environmentalist groups try to stop them).

        • railroads are just the bright shiny ideal model of a succesful industry today aren't they?
          I wasn't referring to their place in the marketplace TODAY, so much as I was trying to point out that during their early days, they were the model of why business should be able to merge. Combined, they did things that wouldn't have been possible as hundreds of separate businesses.
        • "railroads are just the bright shiny ideal model of a succesful industry today aren't they?"

          His whole point was the historical impact, smart ass. Railroads are not as important today as in the 1940s, but try fighting WW2 without them. Try building any seriously industrialized nation without a national railroad system. We may not need them as much now, but if they hadn't been around when we did we probably wouldn't have been able to industrialize to the extent where we could replace them (to some extent)
        • Just look at the number of successful I.T. businesses that have been busted because of 'acquisitions', 'mergers' and 'buyouts'. From software programming to gaming, and quite a many notable names have gone to shit. Just for some already loaded parties can make some more quick cash.

  • The message board on Yahoo? (Score:3, Insightful)

    by LordSnooty ( 853791 ) on Tuesday February 27, 2007 @09:32AM (#18166422)
    Now someone will tell me that all the great movers & shakers in Wall Street are signed up to the same Yahoogroups list. Excuse me if I don't believe that. Is this idle speculation masquerading as news?
    • Is this idle speculation masquerading as news?

      No shit, Sherlock. The intro paragaph ends "There's no firm word that AMD is even being considered for purchase, but it's certainly and interesting prospect." Arg, back to work.

  • oooohhh, yahoo! trumps research! buy now! (Score:5, Insightful)

    by swschrad ( 312009 ) on Tuesday February 27, 2007 @09:36AM (#18166456) Homepage Journal
    freakin' preposterous.

    yahoo stock boards are full of stock pimps and shenanigans, as well as cranky posters and politics junkies.

    I'd rather get stock touts from a street drunk than that board. you could probably do better pumping and dumping penny stocks mentioned in spam than using yahoo as your guide.

    everybody, repeat after me. "Tech stocks are NOT bubble plays, they are lead balloons. there is ONE tech stock in a thousand that is a money rocket, the rest just plink along as no-brain speculators play with them."

    trade if you must on the fundamentals, not on cool technology. cool technology lasts half a year, then it's trumped, and it costs 50 times as much to find the next breakthrough as the first one.

    • Re: (Score:3, Informative)

      by chriss ( 26574 ) *
      The article that describes the unusual movement in the market and the possibility of a buyout is from Reuters, so it can be considered valid. Only the idiotic discussion about IBM buying AMD is from Yahoo.
      • yahoo chat boards are entertainment, not authoritative.

        any news article that doesn't distinguish the difference is spurious.

        even from reuters financial services, which is the formal name of the outfit that operates the reuters news wire.
  • Seriously. I'm reminded of the new wave of spam, mainly "pump and dump" scams where the spammers try to get the recipient to buy some stock, and after it goes up a bit the spammer dumps his stock to make some profit. Seems like this could happen at a higher level, from the way these kinds of "articles" are pushed out.

    Every time "news" like this gets around, everyone speculates pretty much everything about everything. Sony wants to buy Nintendo. Microsoft wants to buy Nintendo. IBM wants to buy AMD. Microsof

  • Here's how I read it (or: you got the same spam?) (Score:5, Funny)

    by kimvette ( 919543 ) on Tuesday February 27, 2007 @10:20AM (#18166986) Homepage Journal
    I think I got this spam too! I didn't know Slashdot published spam!

    ALERT FOR TUES FEB 27!

    NOW IS THE TIME TO GET IN THE GOLD INDUSTRY!
    DON'T LET THIS RUNNER PASS YOU BY!
    WATCH A*M*D TRADE ON TUESDAY FEBRUARY 27!

    Last: $15.8(Up 7%)
    1y Target Est: $17.47
    Market: Bullish

    With the price of precious CPUs continuing to skyrocket, mining
    companies had another year of record profits. With limited supply and
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    abating.

    Eyeore, the old grey donkey, stood by the side of the stream and looked
    at himself in the water. "Pathetic, " he said, "that's what it is."
    "Oh, " said pooh. He thought for a long time.

    shall never want anything I can give. Seek and you will find, in this world as well as in the next. See should not find them much more noble or disinterested than Luther's those decorations which astonish and dazzle the audience, retire, not
    by services done, or offered by expressions of regard and esteem by I do not want it. If your own library grows too voluminous, you will not Wee most historical events traced up to their true causes, I fear we
    you against either using, believing, or approving them. They are the of all the letters which either of you shall receive from me and I will years your whole depends upon them. I will tell you sincerely, my hopes knowledge of history which, of all other studies, is the most necessary
    German, which will be a sure way of keeping up your German, after you either wonders or admires. who were, and men of business, because they had business to do, though character. The wisest man sometimes acts weakly, and the weakest

    (I kid, I kid)

  • Apple (Score:2, Interesting)

    by scstsut ( 855808 )
    Though it won't happen. Bask in ruminations of what would happen if Apple bought AMD.

    • Though it won't happen. Bask in ruminations of what would happen if Apple bought AMD.

      I'd be stuck between buying Apple and Intel machines as a choice (See: rock and hard place) until another company put enough funds out for research to make decent alternative chips (see: close to never). It took us long enough to get a viable alternative to Intel, let's just hope it sticks around.

      • Re: (Score:1)

        by scstsut ( 855808 )
        Don't worry, Apple knows it's business and that making procs isn't it. I'd bet on IBM if anyone.
    • Bask in ruminations of what would happen if Apple bought AMD.

      Apple would go bust and a million Mac zealots would cry out in agony?

      I admit it's an attractive vision, but sadly unlikely.
  • It would make sense for Sun to buy AMD, now that they're moving towards the Opteron/Linux platform (or Solaris x86).

    Also it makes sense to prevent IBM from buying AMD.

    I'm not sure if Sun has the cashflow though, are they actually bigger than AMD?

    I wonder if Apple would be interested - they could dump Intel/Nvidia and use A[TI]MD instead....

    Then there's Dell/Alienware, they could use a central source for CPU/GPU.
    • Eyeore, the old grey donkey, stood by the side of the stream and looked at himself in the water. "Pathetic, " he said, "that's what it is." "Oh, " said pooh. He thought for a long time. Man... that bit really said it all. I suppose there CAN be truth in spam.
    • Urm, why IBM? They make their money from SI these days, not hardware. There's no strategic threat, and neither immediate financial nor echnical upside I can see. Sun - no way. They've taken a bath with their own hardware recently, (good though it is), and are struggling with s/w. Apple. Hmmm. Interesting play. For: Jobs trying to re-create Apple's 'glory days' (did they exist?) but this time owning both the platform AND the CPU. Against: Common sense. The vast majority of AMD's revenue comes from sales
  • Despite the NASDAQ being down 1.5% so far today, AMD's only given back a bit more than 2%, leading me to believe this is at least fairly serious speculation.

    In an instance where the price was pumped because it was baseless guessing, today's market dive should've given back the 5% gain and then some. Of course, no one can predict the market, and this is only the opinion of one investor (disclosure: I do not own any shares of AMD or its competitors).

    There is still serious thought that AMD is going to b

  • Yahoo Msg Board Speculation?! (Score:4, Insightful)

    by SwashbucklingCowboy ( 727629 ) on Tuesday February 27, 2007 @10:46AM (#18167350)
    That's the basis for this? Speculation on a msg board?

    Might as well read the National Inquirer...
  • for no other reason than the new stock ticker could read:

    IMBAIT

    Which could read one of two ways: I'm Bait or I M-bate.

    Either way, I'm amused.

  • Huge upside potential (Score:3, Insightful)

    by wytcld ( 179112 ) on Tuesday February 27, 2007 @11:20AM (#18167768) Homepage
    We know from the last few years experience that AMD can, for limited periods of time, pull ahead of Intel. That initially surprised a bunch of people whose conventional wisdom was that AMD would always merely follow, and its stock doubled. Then Intel pulled ahead again, and AMD's stock fell all the back and some. But before that reversal, AMD (1) gained significant market entry (e.g. Dell) so that in the event it pulls ahead of Intel again, it can more immediately capitalize on that lead, (2) bought a major graphics chip maker, which can potentially give it more ways to pull ahead. But that was expensive, so:

    At this point AMD might want to take on a significant minority investor from private equity. That would ease its short-term debt. From the investor's point of view, all that is necessary to make a huge profit is for AMD to pull ahead of Intel again - however briefly - which could easily double the value of AMD's stock again. But the greater upside is if AMD can innovate its way to a longer-term lead over Intel. If that were to happen AMD's value could increase by an order of magnitude.

    Also, if you're private equity, you probably feel you're smarter than God, so that if AMD were compelled by your investment to listen carefully to your strategic ideas, the upside potentials would become much better bets.

    Of course, there's a substantial chance of losing it all too. But over the last 40 years the GDP per capita in the US has doubled, while the median income per capita has held within a few percent of steady. That basically means that the there's twice the wealth - more than that considering population growth, but twice as much for each person on average. But each person doesn't have that. It's the super rich who have it, and they're the players in the private equity game. They can afford to gamble big, because they have so much they can take huge losses on any particular bet and still come out far ahead of the rest of us.
    • Comment removed based on user account deletion

    • AMD can, for limited periods of time, pull ahead of Intel. That initially surprised a bunch of people

      It surprised people... 10 years ago? When AMD released the K6? And the short period of time is EVER SINCE THEN? It's been Intel that has shortly had the better performing products in that time-period, and then, it was usually only on floating point performance, while most apps are integer-based...

      Even now, I don't believe that Intel has the lead, or at least not much of one... Intel's chips usually don'

  • Anyone who actively follows stocks and business knows that Yahoo message boards, especially the stock boards, are the stupidest wastes of time ever. All it is is filled with garbage. You cannot reference Yahoo message boards and expect to be taken seriously. I'm surprised they haven't taken down those boards like they did their news discussion boards.

    Also, FYI IBM is ALWAYS the name dropped when someone wants to start a rumor of a possible buyout. My company has been rumored for 5 years that its going t

  • Oh please let the buyer be Nvidia (Score:3)

    by MrCopilot ( 871878 ) on Tuesday February 27, 2007 @01:20PM (#18169346) Homepage Journal
    Would that be sweet or what? Nvidia, nforce chipsets, AMD64. Ahh....

    Of course nVidia would need a sizable loan. Come on we could all chip in...

    • Wouldn't they then have a complete, total monopoly on the graphics card market then?

      I'm no expert on the gfx card business front (I only vaguely remember the 3dfx Voodoo series), but isn't that sort of consolidation usually not so good for advancing technology and staying competitive?
  • what will they think of next? Apple using Intel chips, or Dell using Athlons?
  • Idle chatter on a stock board is noise. It can be tuned out and ignored. AMD is down 3.95% for the day, btw. DJIA had an awful day after the China sell-off. That's the real news, a possible recession, not pump and dumps on Yahoo.
  • Everybody knows you get your news and industry analysis on the Lycos message boards, Duh!
  • With this: http://www.centrify.com/directcontrol/mac_os_x.asp [centrify.com] Shameless plug.
  • "As a result, the AMD message board on Yahoo! is full of speculation on who has their eyes on the company."

    Congrats, you have described _every_ distressed company message board on Y! Finance.

    So are we going to see articles on GTW buyout rumors now?

    Moderation on story: -1 Stupid.

    --
    BMO
  • http://www.stockalicious.com/stock/amd/charts [stockalicious.com] Only Rtards would touch this stock within an armpole

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