AMD and ATI merging?

[SUBMAN1]

What will happen to NVidia? AMD has deep pockets so I wonder!

-S

http://www.theinquirer.net/default.aspx?article=33185

[Rilder]

Ahh my 2 favorite computer brand names united together.... they shall rule the world i think :D

[SUBMAN1]

Ahh my 2 favorite computer brand names united together.... they shall rule the world i think :D

Yep - AMD and ATI would be proud if they saw my system. X2 + x1900XTX. Only problem is, which is good for us of course because of competition, is that Nvidia won't sit idle!

-S

[SUBMAN1]

Its official - and its not a merge, but a buyout:

-S

http://www.bloomberg.com/apps/news?pid=20601087&refer=&sid=aajbR.zAAw98

Advanced Micro Agrees to Buy ATI for $5.4 Billion (Update3)

July 24 (Bloomberg) -- Advanced Micro Devices Inc., the world's second-biggest semiconductor maker, agreed to buy ATI Technologies Inc. for $5.4 billion, adding computer-graphics chips to its product lineup. ATI shares surged.


ATI stockholders will receive $20.47, including $16.40 in cash and 0.2229 Advanced Micro shares, for each ATI share, the companies said today in a statement. The offer is 24 percent more than ATI's closing price last week.


Advanced Micro Chief Executive Officer Hector Ruiz is making the biggest purchase in the company's history to help escalate his challenge to Intel Corp., which dominates the market for semiconductors. Sunnyvale, California-based Advanced Micro is buying the largest maker of computer graphics chips for notebook computers, helping it win more orders from computer makers such as Dell Inc. and Hewlett-Packard Co.


``Strategically this deal makes sense in the long run,'' said Michiel Plakman, who manages about $10 billion in technology stocks at Robeco Group in Rotterdam, including shares of Advanced Micro Devices and ATI.


ATI shares jumped $2.62 to $19.18 at 8:04 a.m. in early trading on the Nasdaq Stock Market. Advanced Micro fell $1.51 to $16.75 on concern the company may overpay in its quest to find new ways to beat Intel. ATI is trading at 28 times next year's earnings, while Advanced Micro trades at 15 times and companies in the Standard & Poor's 500 trade at 14 times.


``The market won't like it,'' Lawrence Borgman, an analyst at Jesup & Lamont Capital in New York, said July 21. ``It doesn't make sense unless it's something that customers are demanding.''


Cash, Shares
Advanced Micro will pay $4.2 billion in cash, $2.5 billion of which will be financed by Morgan Stanley. The company will also issue 57 million of its shares, increasing its share count by 12 percent, and 11 million restricted stock options.


Advanced Micro cut Santa Clara, California-based Intel's market share to less than 80 percent in 2005 for the first time in four years, a gain that Advanced Micro is seeking to extend. Ruiz told analysts last week he expects to take more sales as PC makers looking to diversify their suppliers.


``This is a bold, long-term strategic move by Hector,'' said Jon Peddie, president of Jon Peddie Research in Tiburon, California, which does market research on the graphics industry.


Convincing Dell
ATI will give Ruiz a leg up by adding a product that Intel has long offered clients. Intel's products such as Centrino include chipsets with graphics capabilities, giving it an advantage when dealing with customers.


``The customers insisted for some time that we combine forces to do a better job of serving them,'' Ruiz said in an interview.


Round Rock, Texas-based Dell, the largest personal-computer maker, this year gave Advanced Micro its first order, breaking an exclusive agreement with Intel. Adding graphics chips may help Advanced Micro make further inroads.


``We have a better shot at convincing Dell that our product should be used in their computers,'' Ruiz said. ``We have been talking to Dell forever about selling them on the idea that AMD is a great choice for their product.''


Catch up
ATI has been playing catch-up with Nvidia Corp. in PC graphics chips after last year missing an upgrade cycle for the most profitable and powerful semiconductors.
ATI Chief Executive Officer David Orton said last month that sales at the company's PC unit had been slow in June and he expects demand to pick up in the second half of the year.


``You look for complementary strength, ATI and AMD bring together the opportunity to go stronger in the PC market,'' Orton said in an interview. The company had no other suitors, he said.


On June 29, ATI reported a fiscal third-quarter profit of $31.9 million, compared with a loss of $450,000, a year earlier. Sales gained 23 percent to $652.3 million. ATI is predicted to report revenue of $2.57 billion, the average of 33 analyst estimates taken by Thomson Financial.


Advanced Micro ended the second quarter with about $2.53 billion in cash and equivalents, according to Bloomberg data. Profit and sales have been hurt by price competition with Intel. Revenue fell 3.5 percent to $1.22 billion last quarter.
The distraction of buying a company the size of ATI may crimp Advanced Micro's ability to drive customer demand and compete with Intel.


``In the short term it's negative as AMD will have a lot on its plate integrating ATI at a time of overcapacity and a fierce price war with Intel,'' Plakman said.