Is AMD Looking At a Buyout?

Minutes before Tuesday's closing bell, good old Reuters said that Advanced Micro Devices (NYSE: AMD  ) is looking for "options," going so far as hiring JPMorgan Chase (NYSE: JPM  ) to guide the company. Strategies might include selling a chunk of AMD's patent portfolio, or indeed looking for a wholesale buyer of the company.

Shares jumped as much as 15% on the surprising news, then cooled down a bit. AMD shares closed 5% higher.

But then we were reminded that even Reuters' anonymous sources might not have all the answers. Reaching out to Drew Prairie, AMD's longtime press contact, I was told in no uncertain terms that there's no deal on the table: "AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly differentiated technology assets is the right approach to enhance shareholder value. AMD is not actively pursuing a sale of the company or significant assets at this time."

In other words, AMD believes in its strategy and isn't interested in any major strategy shifts. Thanks for asking.

Cynics might ask whether AMD really means it, or just wants to cover its tracks. But the SEC wouldn't look kindly on unambiguous denials of game-changing deals that turn out to be in progress after all. Misleading investors might even qualify as fraud, and nobody in AMD's offices wants any of that action. A simple "no comment" might keep the buyout rumor alive, but this statement kills it.

The company even has a history of debunking acquisition rumors. Back in 2010, when Oracle (NYSE: ORCL  ) had just swallowed chip-designing server company Sun Microsystems, incessant chatter pointed to AMD being next on Oracle's takeout menu. But ex-CEO Dirk Meyer took the stage at an industry conference to lay that idea to rest: "AMD is not for sale, but we are happy to listen to any proposal which is in the interest to our shareholders."

And indeed, Oracle still hasn't bought AMD.

The straight-faced denial of the Reuters report took the shine off AMD's price spike, but the stock still traded at least 3% above pre-rumor levels all night long. That's also where trading started up this morning.

AMD might not have an exit strategy in mind, but a buyout really wouldn't be a bad idea right now. The company is fighting a losing battle against larger rival Intel (NASDAQ: INTC  ) even as their shared market shrinks at an alarming pace.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates as news develops for an entire year. Click here now to learn more.


Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 14, 2012, at 7:35 PM, SnarfJabroni wrote:

    "The company even has a history of debunking acquisition rumors."

    Anders Anders Anders....an AMD fanboy to the end.

    The company has a history of STARTING acquisition rumors, in order for their execs to prop up their stock.

    If I had a nickel for every AMD takeover rumor in the past decade.......

    "AMD might not have an exit strategy in mind, but a buyout really wouldn't be a bad idea right now."

    REALLY? Apparently you are not familiar with AMD and Intel's cross-license patent agreement, and what happens to AMD's ability to manufacture x86 if they are sold or go bankrupt? You should probably educate yourself...

  • Report this Comment On November 15, 2012, at 8:49 AM, rav55 wrote:

    "If I had a nickel for every AMD takeover rumor in the past decade......."

    You'd have maybe 15 cents.

    AMD can be bought out by ANYONE and still manufacture x86 CPU's

    As long as AMD is still on the label. MicroSoft or Apple or Oracle can buy out AMD still produce x86 AMD Opterons.

    AMD would be a wholly owned subsidiary.

    AMD could be bought by private equity and STILL produce x86 cpu's.

    So, YOU need to read the the cross-license agreement.

Add your comment.

DocumentId: 2112641, ~/Articles/ArticleHandler.aspx, 4/21/2014 6:14:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement