Reports: Dell May Want To Acquire AMD
Reports that Dell is looking to acquire AMD emerged on Tuesday, raising the value of AMD's stock by five percent, as uncertainty looms over the chipmaker following the resignation of several top-level AND executives in the past month.
Barron's on Tuesday reported that Dell is considering acquiring AMD in what would represent a major shift in strategy for the Round Rock, Texas-based manufacturer. The report says AMD is a valuable target for Dell as it would allow the company to offer new capabilities based on IP acquired from AMD, including both AMD's x86 CPU technology as well as its graphics processing business. AMD's purchase price is currently valued at about $6 billion, according to the report.
AMD declined to comment on the story citing its policy not to respond to rumors and speculation.
A report from Bloomberg surfaced later on Tuesday citing Wedbush Securities analyst Patrick Wang, who said the resignation of AMD executives may have led to speculation that Dell wants to acquire AMD, as a shakeup in the chipmaker's leadership could provide Dell with a newfound -- albeit unlikely -- opportunity.
’There is no management team there,’ Wang said. He added that Dell acquiring AMD remains ’a far-fetched possibility.’
Nevertheless, in recent years Dell has begun offering more AMD-powered products, particularly in the server market. AMD launched its latest Opteron 6100 series server processors last week, while AMD launched its Opteron 6100 series and Dell, on the same day, launched the Dell PowerEdge C6145 server based on the new AMD Opteron 6100 server chips.
AMD said it will offer its new Bulldozer architecture for servers in the third quarter. However, according to Bloomberg, Wang says there's been some speculation that manufacturers will soon launch systems based on AMD's new Bulldozer chip, which may have also contributed to the rise in AMD's stock value. According to AMD, the Bulldozer processors will be up to 50 percent faster compared to previous offerings and include more memory throughput than current server chips provide.
AMD's chief executive officer Dirk Meyer resigned unexpectedly last month, and AMD replaced him with its CFO and senior vice president Thomas Seifert on an interim basis while the company's board of directors searches for Meyer's replacement.
At the time, Wang said Meyer’s departure was ’shocking,’ given the role he had played in turning the company around.
Next: AMD's Leadership Vacuum
Meyer, a 14-year AMD veteran, took over for ex-AMD CEO Hector Ruiz in July 2008 at a time when the chipmaker was facing a bleak future after racking up seven consecutive quarterly losses.
Bloomberg's report says Meyer left after a dispute with the board over AMD's struggles to win back market share in the server segment, and gain market share in the rapidly growing mobile PC segment.
Last week, Sunnyvale, California-based AMD said two more of its top executives are stepping downas well. Chief Operating Officer Robert Rivet and strategy head Marty Seyer resigned effective Feb. 8, although Rivet and Seyer will remain with AMD briefly to help facilitate the transition, according to AMD.
AMD said its Corporate Strategy team will now report to Harry Wolin, senior vice president, general counsel and secretary. John Docherty, AMD's senior vice president of manufacturing operations has taken over responsibility for all aspects of AMD's product manufacturing process, AMD said.
AMD said Doherty now leads AMD’s Global Operations organization, which includes AMD’s Assembly, Test, Mark and Pack operations, Supply Chain, Global Supply Management, Global Logistics, and Sales & Operations Planning.
After the initial five percent jump since the rumor of Dell possibly acquiring AMD began circulating, AMD gained 35 cents, or 3.9 percent, to $8.60 by the close of New York Stock Exchange composite trading on Tuesday.