In the wake of AMD's fourth-quarter financial results announcement, in which the company announced near operational break-even and a $1.77 billion net loss, a rumor has emerged that IBM may be planning a takeover bid for the ailing chipmaker. The rumor has gained enough momentum to warrant a mention on Reuters, which says AMD's shares went up 8% yesterday as a result of the speculation.
That said, analysts seem split on the actual likelihood of a merger. On one side, vFinance Investments options strategist William Lefkowitz tells Reuters, "The takeover of AMD by IBM has been mentioned before and with AMD shares being so low, it might be a good time for IBM to acquire them." On the other, CRT Capital Group analyst Ashok Kumar claims an acquisition would be a "pretty low-probability event because IBM is moving away from hardware and manufacturing and moving to software and solutions." Kumar adds that an AMD buyout would "destroy shareholder value for IBM."
There is a third option, however. AMD and IBM are already engaged in a research and development partnership, and MarketWatch quotes JMP Securities analyst Krishna Shankar as saying the firms could strengthen that partnership and turn it into a more formal affair. The partnership could play into the "asset-light" business model that AMD CEO Hector Ruiz briefly mentioned last week, as well.
According to Shankar, a deeper partnership between AMD and IBM could allow the former to outsource production to IBM's New York fab. The two companies could also enter a cross-licensing deal to deflect possible lawsuits from Intel that would seek to limit AMD's processor outsourcing capability.
|Mechanical roadmap points to hard drives over 100TB by 2025||112|
|Ubisoft doles out freebies to make up for AC Unity issues||6|
|In the lab: Cooler Master's Silencio 652S quiet case||6|
|Native FLAC support coming to Windows 10||42|
|Early Black Friday deals: 4K for $350, 1080p IPS for $100, and more||21|
|Zalman is 'not going bankrupt'||19|
|Tuesday Night Shortbread||31|
|Nvidia expands Grid selection with #GridTuesday initiative||5|
|TR's 2014 Christmas gift guide||39|
|I'll take old-school over Optimus Prime's nutsack covered in neon lights any day of the week.||+61|