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AMD A Ripe Target For Buyout?
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."
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.
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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.
If Bush wants to kill the terrorists, he should jump off a cliff.
And not a single cute anagram out of IBM, AMD, and ATI..
:(
Maybe "Mama Bid It" or "AM BitMaid"
Wow! People are speculating on the Yahoo message boards? This is a legitimate rumor!
Watch out AMD!
After all, Yahoo is the definitive source for financial information.
"As God is my witness, I thought turkeys could fly." A. Carlson
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.
Turrsts bad, bush good! ook ook!
Blar.
'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 rules the company.
Read radical news here
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?
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.
if this is supposed to be a new economy, how come they still want my old fashioned money?
http://money.cnn.com/2006/01/05/news/companies/pr
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.
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.
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"Ain't Gonna Happen, But would Probably Make Sense."
Not that I think this would really happen but wouldn't it make some sense for apple to buy them? Ya know so they could stop pretending be a hardware company and acctually be one. ;-)
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 any influence on the PC or server markets.
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.
I love this kind of speculative "news". It doesn't exactly say anything about AMD and just makes guesses. IBM doesn't seem to even have considered such a buyout and for all we know, Bill Gates could be lurking in the shadows.
I swear if AMD gets bought out it will be the end of that company, and when i switch to Intel.
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. Microsoft wants to buy IBM. Intel wants to buy AMD. George Bush wants to buy AMD. Microsoft wants to buy George Bush.
This isn't even "news"- it's rampant speculation pushed out by someone trying to make their money by writing articles. I can't blame them for wanting to get paid, but that anyone picked it up and published, including Slashdot, is just stupid.
We can talk about speculation and small stock increases until we are blue in the face, but it doesn't mean anything.
This isn't news. It doesn't matter.
The serious Yahoo! AMD posters moved to InvestorVillage after Yahoo! changed to their awful new format. Only spammers and boiler-room drones are left at Yahoo!. The Yahoo! AMD board was one of the most active stock boards on Yahoo! until Yahoo! ruined it.
Anyhow, the general consensus at IV is that the buyout rumor is FUD. Maybe someone will buy a minority stake, AMD wouldn't mind having more cash to build fabs with, but that's about it. The stock is undervalued though, what with the Barcelona cores coming and the new ATI chips on their way.
I think I got this spam too! I didn't know Slashdot published spam!
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(I kid, I kid)
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Isn't that Richard Gere's character's job in Pretty Woman?
"The past was erased, the erasure was forgotten, the lie became truth." ~1984 George Orwell
Though it won't happen. Bask in ruminations of what would happen if Apple bought AMD.
sqribbles.blogspot.com/.
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 LLC
every day http://en.wikipedia.org/wiki/Special:Random
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.
#include <sig.h>
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 be bought up by a private firm, at least in part. If the 13D filings don't come in the near future, it's going to get dumped hard, though. I personally don't think its up for sale and am waiting for it to fall to a new 52 week low following the selloff. I plan to invest in AMD following that. Again, just my guess.
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.
if this is supposed to be a new economy, how come they still want my old fashioned money?
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.
Have you read the moderator guidelines? Well, have you, PUNK? (and I want a Karma: Gnarly option)
If there's one thing the Chinese need the most is processors and technology to make processors that they have 100% control of. It's a key piece towards world domination.
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).
[RIAA] says its concern is artists. That's true, in just the sense that a cattle rancher is concerned about its cattle.
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.
"with their freedom lost all virtue lose" - Milton
I bet Intel is praying that AMD gets bought (even if it is by a powerhouse like IBM). That brings the greatest chance that AMD will start doing things differently and perhaps become less effective.
Remember that self-interest rules the day and buyouts make management focus new politics & golden parachuts rather than business strategy.
Isn't that Richard Gere's character's job in Pretty Woman?
Mate, you are definately on the wrong site.
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 to be bought by IBM. It happens about once a year. It's either IBM, Oracle, CA or EMC that people use as possible companies with deep pockets, ie companies with deep pockets. Again, a completely uncredible rumor.
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?
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 are a great candidate because they have the potential to break out of the boom/bust cycle through a few fairly simple (but expensive) steps. Now is a great time for it too because they are so incredibly undervalued, as soon as their next-gen CPU is released they're stock is going to return to higher levels again.
Of course nVidia would need a sizable loan. Come on we could all chip in...
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Remember, that albatross called Itanium was the reason why Intel offered a weak spot to AMD in the first place.
No such animal exists today.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
what will they think of next? Apple using Intel chips, or Dell using Athlons?
Also notice that the Zune uses the Freescale iMX31L processor. M$ Uses which ever technology is best for the given situation, they have been known to cut off their nose to spite their face, but have gotten better about it lately. I don't think IBM buying AMD would cause M$ to quit supporting the processors. MAC started using Intel, and winderz still can be loaded on that platform.
"My immediate reaction is "WTF? What kind of moron doesn't make things 64-bit safe to begin with?" Linus
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.
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Everybody knows you get your news and industry analysis on the Lycos message boards, Duh!
Shift happens. Fire it up.
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, Harrah's, etc. are not in declining sectors.
I don't disagree with your basic analysis for LBOs...but not all PE is an LBO. There is a substantial buy-and-hold group of PE investors (where "hold" is 5+ years...hey, this is Wall Street, what do you expect).
Private equity is not all that different than regular (as in stock market) equity...it's just, well, private. The current issue of Fortune has an excellent, extensive story on private equity today.
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One possible revenue boost, though the size would certainly be questionable, would be to open the source of ati drivers for the linux crowd. That might give them some moral high ground, in line with their work on the OLPC. Dunno if having a fully open driver for high powered cards would make that much of a difference, but it's a thought.
"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.
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BMO
http://www.stockalicious.com/stock/amd/charts Only Rtards would touch this stock within an armpole
PRC, perhaps?
Clearly if intel bought amd, it would benifit the most.