AMD to Acquire ATI

Forbes.com reports AMD (Advanced Micro Devices) will purchase graphics chipmaker ATI Technologies for $5.4 billion.  The deal is expected to close fourth quarter this year.

Even though the takeover looks fairly valued, RBC analyst Steve Arthur said there is limited upside to the offer unless competing bids are made for ATI.

For now, Arthur said AMD’s takeover deal, which is expected to close in the fourth quarter, effectively offers his one-year price target of $21 now.

Will the merger strengthen AMD’s position against rival processor maker Intel?  BetaNews reports the merger will allow the company to bring integrated products to the market:

The merger will allow AMD to offer integrated processor and graphics solutions to its customers. By 2008, AMD plans to introduce new processor configurations that would integrate the CPU and graphics processor into a single unit. The end result will be smaller, more powerful computers.

In a conference call to analysts, AMD’s Chief Executive, Hector Ruiz (as reported by Techtree.com) hopes the acquisition will result in more innovative products:

Hector Ruiz, chairman and chief executive officer, AMD, said, “Bringing the two great companies together will allow us to transcend what we have accomplished as individual businesses, and reinvent our industry as the technology leader and partner of choice. We believe AMD and ATI will drive growth and innovation for the entire industry, enabling our partners to create differentiated solutions, and empowering our customers to choose what is best for them.”

Dave Orton, ATI’s current president and CEO, is also optimistic about the acquisition:

[He] said, “This combination means accelerated growth for ATI, and will benefit all our product lines. Joining with AMD will enable us to innovate aggressively on the PC platform, and continue to invest significantly in our consumer business to stay in front of our markets.”

According to BusinessWeek online, Nvidia’s CEO couldn’t be any happier with the impending merger:

“I thought it was just impossible to get a gift like this,” crowed Nvidia CEO Jen-Hsun Huang, in an interview with BusinessWeek.com. ATI is “basically throwing in the towel, leaving us as the only stand-alone (graphics chip) company in the world.”

AMD is aware it has its work cut out for itself.  The officers at both companies, however, are prepared to do what it takes to prove that both product lines will benefit from the merger.  From the Press Release at AMD.com:

The combination will create a processing powerhouse by bringing AMD’s technology leadership in microprocessors together with ATI’s strengths in graphics, chipsets and consumer electronics. The result: A new and more formidable company, determined to drive growth, innovation and choice for its customers, particularly in the commercial and mobile computing segments and in the rapidly-growing consumer electronics market. Combining technologies, people, and complementary strengths, AMD plans to deliver in 2007 customer-centric platforms for the benefit of customers who want to collaborate in the development of differentiated solutions.

Good luck, guys.                                

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Explore posts in the same categories: AMD, ATI, BetaNews, Business News, BusinessWeek, Dave Orton, Forbes, Hector Ruiz, Intel, Nvidia, Tech, Technology, Technology News, Techtree.com

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