Report says Dell might seek to acquire AMD

The departure of CEO Dirk Meyer and two high-profile executives has left us wondering about AMD’s direction going forward. A report by Barrons.com provides a possible explanation: the chipmaker is gearing up for an acquisition.

Barrons says chatter around Wall Street hints that Dell (yes, Dell) is eying AMD as a buyout candidate. This talk apparently lacks specifics, which doesn’t help its plausibility. How exactly would chip design operations fit into Dell’s business?

This is no one-off attention-grabbing headline, though. Barrons quotes a separate Bloomberg story that echoes similar speculation—namely, that there is some “chatter” about an AMD acquisition by an unknown party. Bloomberg calls the chatter “far-fetched,” but it concedes that “there is no management team” at AMD, which could make it ripe for the picking.

I’m reminded of last year’s reports about a possible acquisition of AMD by Oracle. At the time, Dirk Meyer went on the record as saying his company was “not for sale.” Now, I’m almost tempted to put on my tinfoil hat and wonder if that response has something to do with his ouster as CEO. (Thanks to X-bit labs for the link.)

Comments closed
    • Suspenders
    • 12 years ago

    Spot on about Wal-Mart. I’m reminded of a study I read about that showed how towns where Wal-Mart moves in to end up being worse off than before they moved there, mostly because they pay such low wages and end up killing off local businessess.

    • Suspenders
    • 12 years ago

    [i<]I intend to be extremely annoyed by business and economic arguments framed upon where a worker lives and where his or her corporate parent is incorporated, rather than what that worker can do and how the employer treats the workforce. If you want my dollar in exchange for a good or service, earn it -- don't come whining about how I should support you because we share the same citizenship.[/i<] You're basically a "world is flat" kinda guy then. The world isn't flat though; it's not simply an argument of you supporting them, you also benefit from the local activities and investments of businesses, which if you buy from them you help support in a nice virtuous cycle. Those national arguments you don't like do have merits, and you shouldn't dismiss them so quickly.

    • Suspenders
    • 12 years ago

    Yes, this is a large problem with the Canadian economy. Things are very counter-cyclical; when the resources side of things is doing well, a strong dollar is great but hurts Ontario’s manufacturers, and when resources are cheap the dollar goes down and manufacturing does well. It’s very difficult to craft a coherent economic policy when different parts of the country benefit from the opposite conditions.

    • Suspenders
    • 12 years ago

    Just what I mentioned previously, that companies that identify strongly with a particular country are much more inclined to have an interest in and invest in public goods for that country. This can take the form of investments in universities and research centres, a la RIM and Nortel, or more traditional investments in the economy, something like Intels “Invest in America” campaign or “Startup America”. Other benefits are less visable, but still important. For example, in cases of bankruptcy the first facilities to be closed during consolidation are often the foreign ones, while the domestic ones are kept open. This is especially so in cases where the brand is the country, like a lot of German firms. Can you imagine BMW or Volkswagen (Das Auto!) picking up and leaving Germany?

    Who benefits? The people in that country benefit, as does the company by contributing to the health of its’ home markets.

    • clone
    • 12 years ago

    the dynamics in Canada are different and on the surface the shifting is not noticeable, Canada had a vibrant manufacturing sector in Ontario that has since begun to free fall, but that loss is not being noticed because Canada is a huge nation land wise and other provinces have natural resources and a solid banking system to prop the overall economy.

    the problem with resource rich is that it inflates the dollar killing off the manufacturing sector, once the manufacturing sector goes so does the infrastructure, (engineering jobs, high skilled trades and so on)

    Ontario used to be the province that subsidized Canada it’s now almost bankrupt and screaming for a handout or at least a coherent manufacturing policy in order to stem the tide of losses.

    best example is the massive shift from private sector jobs to public sector in southern Ontario.

    p.s. Canada is a Northern Neighbor not Southern.

    • NeelyCam
    • 12 years ago

    Yeah, why did those people get the loans in the first place?

    • NeelyCam
    • 12 years ago

    A free market wouldn’t have the necessary restrictions and deterrents in place to prevent those with means to take advantage of others for their own benefit. Concentration of power would rule the day, and be backed with weaponry. Only those with better weaponry would be able to resist and, potentially, get to the top.

    Think North Korea.

    • NeelyCam
    • 12 years ago

    [quote<]No idea that you're a socialist. I didn't think they existed in the States ;)[/quote<] Socialists are born in Europe, but sometimes immigrate to the States. They advance their hidden agenda under the Democratic banner, slowly infiltrate the highest ranks of the government, waiting, ready to strike, until.. BAM!!! It's Universal Health Care!! BAM!!! Estate Tax re-implemented!! BAM!!! Lobbying banned!! "Conservatives" (=pro-business, pro-banking crooks) are shipped to Texas with new high-speed maglev trains [i<]really quickly[/i<], and a wall is built at the border so they won't weasel their way back to continue stealing from hard-working americans. And everyone lives happily ever after.

    • Suspenders
    • 12 years ago

    No idea that you’re a socialist. I didn’t think they existed in the States 😉

    Who knows what GlobalFoundries investment strategy is, but their owners, ATIC, certainly have as a goal moving high tech production and jobs to Abu Dhabi, probably as a way to diversify their economy away from oil (which is a smart thing to do, I certainly don’t begrudge them for wanting to do that). If you look at their website they’re pretty clear about their goals:

    [i<]"Established in 2008, the Advanced Technology Investment Company (ATIC) is a specialist investment company mandated to focus primarily on the global advanced technology sector. ATIC is a wholly-owned subsidiary of Mubadala Development Company. Established and owned by the Government of Abu Dhabi, Mubadala is a catalyst for the Emirate’s economic diversification, managing long-term, capital-intensive investments that deliver strong financial returns and tangible social benefits to the region."[/i<] I wouldn't call it "transferring wealth" per se, but it is a state-run strategy that seeks to transfer the heart of an industrial sector to it's own region, with the side effect being quite detrimental to the country it's transferring that from (in this case the USA). With those industries also goes the innovation and skill sets that accompanies them. Countries like China seem to understand that a lot of innovations come from the factory floor, which is why their industrial policies push so strongly for the creation of domestic industries. Again, I don't begrudge countries for being smart about their own economic policies; the lamentable thing here is how dumb the American government (and people) seem to be regarding their own economic policies. Following and believeing in insane policies like "free trade" that basically amount to selling off your own future to your competitors, and pretending that national arguments or governments have no place in economics discussions while their competitors like China are eating their lunch, these things bother me. Unless the States gets smart and adopts an industrial policy that's more than just neglect, and starts paying it's competitors like China the compliment of copying them (rules on "indigenous innovation", "conditional market access", buy-American provisions, credit for domestic industries, etc.), I don't see good things for the future of the American economy. As an aside to this overly long post, the funny thing to me is that techie types are some of the most annoying and most rabid free marketeers out there, which is hilarious and sad at the same time, given the entire tech industry was basically a creation of the US government.

    • maasenstodt
    • 12 years ago

    Roderick Long’s comments on Wal-Mart seem quite pertinent here:

    “Wal-Mart stores frequently acquire their land by eminent domain; in other words, they get to acquire land at lower prices than those at which the owners would be willing to sell voluntarily.

    “Once in business, such stores further benefit from various sorts of corporate welfare, both the direct kind and such indirect forms as the mass of regulations that have the indirect effect of making it harder for small companies to compete with big ones. As companies grow, diseconomies of scale eventually surpass economies of scale, placing a natural curb on their growth; but government regulation, by stalling competition, allows companies to continue growing past this point by externalising their costs.

    “Moreover, Wal-Mart’s entire business model depends heavily on federal transportation subsidies; so its competition with local businesses doesn’t exactly occur on a level playing field.

    “Both Wal-Mart’s critics and its defenders usually see it as an embodiment of the free market. But to me Wal-Mart looks like just one more special interest feeding at the taxpayers’ trough.

    “I’m opposed to Wal-Mart because I like the free market.”

    • WhatMeWorry
    • 12 years ago

    Corporations can and do use government to block competition. But to make a blanket statemate that we don’t live in a free market is going too far. How about Walmart and Target? Sears and JC Penny. (Remember, Sears was a walmart of the earlier generation). How did Walmart superceded Sears?

    Ford, GM, Chrysler. How to Kia and Hyundia establish quite recently and successfully in the US?

    And the list goes on and on.

    • xtalentx
    • 12 years ago

    Or have thousands of people not repay loans.

    • Wintermane
    • 12 years ago

    Amd was doomed the instant its founder left. Since then its realy just been headed to the glue factory. Its prized bits to be sold off part by part by whoever gathers enough to buy the corpse.

    • charged3800z24
    • 12 years ago

    I would see AMD phased out and then there would be no compition for Intel. I don’t see how competitors to Dell would buy CPUs from them. I think AMDs Board needs an over haul and They need Dirk back!

    • maasenstodt
    • 12 years ago

    I think individual wealth and health are both viable as testable indicators of flourishing. I don’t know if happiness would be helpful to test, but testing for anger/misery/lack of happiness strikes me as a good indicator of a lack of flourishing.

    I completely agree about the need to check the darker aspects of human nature. However, I think that using an authoritarian power structure (i.e., the state) to provide that check is not only ineffective but hugely counter-productive. Not the least reason for this is that as a means for enforcing one group’s will over another, the state disproportionately attracts and rewards those darker aspects.

    Human nature being what it is, no means of organizing people can possibly be perfect. However, no centralized, coercive system of governance can match the safeguards against greed, malice, etc. that a decentralized, voluntary free market can provide.

    • thanatos355
    • 12 years ago

    I understand what you’re saying and I understand your reasoning. I just think that it’s shortsighted.

    If nothing else, it would be a HUGE pr boon to Intel to continue selling to Dell. If nothing else, just think of the add campaign.

    “Our chips are so good that even the competition wants them!”

    Do you have ANY idea what kind of effect that would have on the buying public?

    • blacksteel
    • 12 years ago

    Dell doesn’t even like to use AMD CPU’s, why would they want to buy out AMD? It just doesn’t make sense. I’d feel better if IBM bought out AMD, at least thats a company that is innovative and doesn’t suck.

    • insulin_junkie72
    • 12 years ago

    [quote<]They weren't gaming CPUs, but at the time for most applications FPU performance wasn't that big of a deal. Sure, they sucked for games but that wasn't the point of them.[/quote<] The 6x86s also ran fairly hot compared to the competing chips at the time, and required a (for the time) beefier-than-normal heatsink and fan. I remember mine, and learning that the hard way - first CPU I ever owned that NEEDED a fan (it crashed almost immediately otherwise) (Other random 6x86 memory - it took 15 MINUTES to encode a single MP3 with that thing, back in the early days of MP3-dom)

    • ludi
    • 12 years ago

    In AMD’s case, I don’t think it matters at all. Going through bankruptcy would have been disastrous because a reorg could have set them back half a product generation or more, while the supply chain uncertainty could have shut them out of new designs for the higher-end markets and permanently damaged their reputation with such (highly profitable) vendors. Both of these would have repercussions extending out perhaps two years or more. I really don’t see how ATIC owning GlobalFoundries and potentially buying AMD makes a particle of difference on the downside, while the upside is that AMD continues as a going concern, which it might otherwise not. (Worst-case bankruptcy scenario: AMD ceases, vultures come and pick the bones in classic DEC/Alpha style.)

    In the general case, I [i<]still[/i<] don't think it matters all that much, nationalistic sentiments notwithstanding. I intend to be extremely annoyed by business and economic arguments framed upon where a worker lives and where his or her corporate parent is incorporated, rather than what that worker can do and how the employer treats the workforce. If you want my dollar in exchange for a good or service, earn it -- don't come whining about how I should support you because we share the same citizenship. There are some good arguments against rapid globalization -- being able to externalize economic damage without paying for them is one such, for example -- but the "local is automatically better" gets no sympathy from me.

    • Sunburn74
    • 12 years ago

    hahaha i rolled when i read that one

    • NeelyCam
    • 12 years ago

    Retarded or greedy. Or both.

    • TO11MTM
    • 12 years ago

    Technically, Cyrix’s Partnership with IBM did work out rather well in the beginning. The access to their advanced Fabs helped them make the Into what was at it’s introduction a very competitive processor for the intended market. They weren’t gaming CPUs, but at the time for most applications FPU performance wasn’t that big of a deal. Sure, they sucked for games but that wasn’t the point of them.

    However, when they got acquired by National Semiconductor they weren’t really managed all that well. Development kinda spiralled out as NatSemi targeted the Embedded market.

    • Deanjo
    • 12 years ago

    Ya like that is soooooooooooo surprising. It’s not like AMD hasn’t been surviving the last few years off their Canadian arm (ATI) now is it?

    • NeelyCam
    • 12 years ago

    Actually, part of the 22nm announcement was building a [i<]new[/i<] fab in Oregon. I would definitely call that expansion.

    • NeelyCam
    • 12 years ago

    [quote<]Anyway, the point stands, domestic ownership definitely has benefits, and it's not wrong to want more of it.[/quote<] Please elaborate on what these benefits are, and who benefits.

    • NeelyCam
    • 12 years ago

    Key question is, how do you measure how much society is flourishing? Do you measure it in monetary wealth? Health of its members? Happiness of its members? Respect by other societies? Fear by other societies? Population?

    If everything was truly free of external control, natural greed and selfishness of man would destroy everything.

    • NeelyCam
    • 12 years ago

    I agree with what “free” means in “free market”. A true free market is an unstable system that ends in all the wealth being in the top 0.00001%, and causing a full reset (=revolution).

    Could you tell me what is your take on the end goal of GloFo’s investment strategy? It sounds almost as if you believe GloFo to be a government-run global corporation, with the ultimate goal being moving wealth from other countries to UAE. This is sort of what Samsung is doing: massive support from the government, to compete in the global market place.

    You’re right – I was a bit myopic in my post. But otherwise you’re preaching to the choir – didn’t you know I’m a socialist?

    • Deanjo
    • 12 years ago

    Worked out well for Cyrix didn’t it?

    • maasenstodt
    • 12 years ago

    It seems to me that it is things like intellectual monopoly law, government regulation, and tax policies that serve to counteract dis-economies of scale that are hurting innovation.

    • maasenstodt
    • 12 years ago

    It’s important to distinguish capitalism from a free market. We don’t live in a free market. Huge corporations use government to block competition and ensure that they aren’t subjected to market pressures. It is this state-cronyism that most people call capitalism.

    Both capitalism (in its popular guise) and socialism give one group the power to enforce their will upon all others. In neither case does society as a whole flourish to the extent that it could under a third alternative: anarchism.

    • Suspenders
    • 12 years ago

    Yeah, you have to be seriously retarded to run a bank into the ground. You borrow money from the central bank for next to nothing (note that only the big banks can do that), and then lend it out for profit.

    • Suspenders
    • 12 years ago

    Not only by the UN. Americans are actually shorter than Europeans, and since height and well being are strongly correllated in a population, it can be inferred that Americans are actually physically worse off than Europeans. [url<]http://www.physorg.com/news/2010-11-americans-shorter-wider.html[/url<]

    • michael_d
    • 12 years ago

    Hope they do not mess it up. It is definitely good news for Alienware division which will be able to tap into ATI expertise and evidently attain edge over competition.

    • indeego
    • 12 years ago

    Dell only makes 60B a year.
    Margins are crazy.

    • Suspenders
    • 12 years ago

    I disagree. Investing in a new production node is like an expansion of production. A new production node is essentially building a new fab. They could have just as easily built new fabs somewhere else, but chose to do it in the States. As far as I recall, something like 75%-80% of their chip production is still in the States.

    [i<]I never said that ownership doesn't matter[/i<] You said; [i<]What does being American owned have to do with anything?[/i<]. Are you not implying that ownership doesnt matter? If you didn't think this was relevant, then why add it to the discussion? [i<] In fact, without ATIC's GlobalFoundries buyout, AMD might have already gone through a game-ending bankruptcy.[/i<] Maybe, although I doubt it would have been "game ending".

    • ClickClick5
    • 12 years ago

    I would like to see IBM pick up AMD….

    Woo, now THERE is a processor.

    • anotherengineer
    • 12 years ago

    Well Xstrata Copper shut down 80% of a big site in Timmins Ontario, it cost about 650 permanant full time jobs.

    Ontario hydro lost about 60 million/yr in electricity revenue, and the ontario gov took a hit on income tax from the company because the ore is shipped to quebec with lower taxes and hydro rates.

    Plus all the spin off.

    There were a lot of tough times that a CND company could have did the same when it was owned by a CND company

    • anotherengineer
    • 12 years ago

    lolz

    Banks make big money here in Canada. They invest everyones money that is sitting there and make 15% on it and pay them 1% interest in return, good deal for the banks.

    • anotherengineer
    • 12 years ago

    Socialist-Capitalism like Europe. Must be a better overall system than the USA since when it comes to quality of life, education, etc, they always seem to out do the USA at least according to the UN.

    • ludi
    • 12 years ago

    If you’re talking about the $7B announcement that Intel made in February ’09, that was a 32nm upgrade/expansion of existing facilities. If you’re talking about the $6-8B announcement last October for the Arizona and Oregon facilities, that was a 22nm conversion. That does not represent a significant expansion of North American presence. Some jobs are being added, but arguably that’s because Intel has been going like gangbusters lately. These sorts of upgrades are common at all of Intel’s leading facilities; for example, they just announced a $2.7 billion upgrade at Kiryat Gat (Israel) to convert to 22nm as well:

    [url<]http://www.israel21c.org/201102068786/technology/intel-invests-27-billion-in-its-israeli-chip-facility[/url<] I never said that ownership doesn't matter. I just don't think it has any relevance to this discussion the way you and tejas84 evidently thought it does. In fact, without ATIC's GlobalFoundries buyout, AMD might have already gone through a game-ending bankruptcy.

    • Suspenders
    • 12 years ago

    Southern Neighbours? 😉

    I wasn’t just speaking of social programmes, but general investment as well (think RIM throwing money at Waterloo). Also, I think it still is largely as it once was (companies doing the majority of their work in their home nations), just not so much in the States. Large firms like Samsung do most of their work in South Korea, ditto for most Chinese firms. Both those countries economies seem to be doing well.

    I don’t think it’s unfair to say this is a major reason why the US economy is doing so poorly. I recommend you read this piece by former Intel CEO Andy Grove [url<]http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm[/url<] he echoes a lot of my sentiments. His opinion should also be worth a bit more than my own 😉 As for Canada, it's the easiest of all to see what I'm talking about it action. When GM collapsed, the Canadian government ran out there to buy a stake in it ASAP, precisely because they were worried that this American owned firm would just leave Canada alltogether (and remember that autos is the heart of manufacturing in Canada). Were GM a Canadian firm I doubt that would have been such a large consideration. In general though, the Canadian economy is fairly insulated from foreign ownership largely because so much of our economic activity involves digging shit up from the ground and selling it, which basically requires these firms to have a presence on our soil. We'd still be better off owning more of our own firms, mind you, but the effect isn't as great in industries that you can't outsource abroad. Anyway, the point stands, domestic ownership definitely has benefits, and it's not wrong to want more of it.

    • LSDX
    • 12 years ago

    Except that IBM as a potential buyer has (had) its own (x86) license agreement with Intel in the past (don’t know until what date this last, but they did produce the 5×86 Cyrix stuff), and surely has a big enough patent portfolio to persuade Intel into a new agreement. And today, IBM is depended on either Nvidia or AMD for GPUs for its supercomputer to compete, whereas in the past in the past those would be more or less pure IBM.

    As for Dell, buying AMD might even be less interesting, because Dell would not only risk losing the x86 cross patent agreement with Intel, but as a direct competitor, they would probably not get the chance of ever selling AMD CPUs to Apple, be it either for Macs, Macbooks, AppleTV or for future iPads.

    • Suspenders
    • 12 years ago

    Actually, Intel has been expanding their manufacturing in the States, and probably the only reason was because they’re the “hometown boys”. They threw in $7billion not too long ago to add capacity in the US, and generally their most advanced fabs are always in the States. But you are right in a sense, even they have been progressively investing more and more abroad.

    You are, however, wrong, in why these companies have been investing outside the US. Most of the cost of a fab is the equipment, the skilled employees generally cost the same in other countries. The big reason why fabs were and are being built outside the USA has more to do with those other countries having an industrial policy that is more than just benign neglect. The Germans for example provided incentives for AMD to build its fab there. The Israelis did the same for Intel. Hardly a “free market” to speak of. The same goes for a lot of other industries.

    My naieve comment was directed at your idea that the ownership of firms dosent matter, which I’m obviously trying to refute.

    • Suspenders
    • 12 years ago

    There’s no such thing as a “free” market. It just doesn’t exist, outside of maybe Somalia, and to pretend it does is foolish.

    Your “bet” is wrong. Globalfoundries investment strategy has nothing to do with profits or capitalism, it’s about its owners, based in the UAE, wanting it to invest there. And that’s basically my point; there’s more to these sorts of decisions than just your myopic viewpoint of short term profit above all. The roots and ownership of a company is a huge factor. Otherwise, how do you explain why companies like Infosys constantly promote brand “India”, or Samsung always investing so heavily in South Korea, or Intel building high schools in the USA? You can bet that if Intel was Chinese owned, they wouldn’t be building schools in the states…

    [i<]Capitalism is about profits instead of caring about the society. [/i<] No, Capitalism is about "the invisible hand" promoting the public interest. It was never about destroying the society around you to make a quick buck, which seems to be what "capitalism" means today.

    • ludi
    • 12 years ago

    Intel and Micron are the only two semiconductor companies maintaining any significant fabrication presence in the United States, and even there the emphasis is on “maintain”, not “aggressively expand”. (Intel, in particular, is expanding heavily in China). Everyone else with major semiconductor overhead has gotten out or is getting out as fast as they can, because Americans like a fat return on their labor and pristine environmental regulations, yet tend to buy their commodity products at the lowest price.

    Regardless of your personal bugbears with globalization, that’s not an argument for keeping semiconductor businesses in the US if (a) they rely on a lot of labor or a lot of industrial processing, and (b) can be designed and manufactured just as effectively elsewhere.

    As for being “naive much” in relation to hometown investment, that’s an impressive thing to say considering that even before the GlobalFoundries spinoff, AMD had been investing heavily outside the US in order to escape the high labor costs.

    • Skeleton
    • 12 years ago

    I was of the notion that as per Intel’s x86 licensing agreement AMD could not be acquired by a third party or risk losing it’s license. This would leave AMD a very useless asset. If otherwise was the case then the ATIC would have acquired it along with the rest of old AMD.

    • cynan
    • 12 years ago

    I agree that companies may be more likely to contribute to social programs in their native country.

    However, It’s not like it once was, where a company would do the majority of the “work” in its native country. with the majority of manufacturing (and unfortunately customer service in some cases) being outsourced to developing countries across the board, it’s not like selling an American company to a foreign entity will likely cost that many American jobs at the end of the day.

    The real evil of the global economy mentality (other than the exploitation of developing countries for the more blue-collar jobs and the resulting lack of such jobs in developed ones) is freedom for companies to expatriate depending on which country has the most amicable tax laws (read charge the least taxes) for their given industry. This alone is a huge pressure against trying to get big corporations to be more socially responsible.

    Also, it is unfair to say that this is the reason why America is “circling the drain”. Looking to their southern neighbors, Canada has recently been on a rampage selling off its largest companies to foreign investors (From its largest players in the steel and mining industry to its largest brewing companies to the Four Seasons hotel chain, and lets not forget ATI, etc, etc….). While I am a bit chagrined by this recent trend, it has not, as of yet, lead to any perceptible economic fallout for Canada.

    • NeelyCam
    • 12 years ago

    “How can banks be profitable? They don’t [i<]make[/i<] money; they just move it around!"

    • NeelyCam
    • 12 years ago

    Sorry, buddy – it’s a free market. I bet GloFo can run their fab cheaper in Abu Dhabi than in the US, and maybe the tax breaks are better, too.

    Capitalism is about profits instead of caring about the society. The alternative: socialism. Which one would [i<]you[/i<] pick?

    • Suspenders
    • 12 years ago

    Naive much?

    I’m constantly amazed at how much people have bought into the whole “globalization” meme hook, line and sinker. Despite “conventional wisdom” amongst the idiot economists out there, who owns your firms IS quite important. Companies with roots in a particular country are much more likely to have an interest in and invest in public goods for that society. And not only for nationality reasons, but for their own economic self-interests. Why this isn’t clear to Americans baffles me, frankly. Is it any surprise the country is circling the drain?

    Anyway, here’s a simple example from the tech industry; Globalfoundries wants to build it’s next fabs in Abu Dhabi. Any guesses why?

    • blastdoor
    • 12 years ago

    And IBM is still vertically integrated. But there was a period of about 10-20 years where conventional wisdom said that vertical integration didn’t make sense anymore, and that the PC clone business model was superior.

    Of course, it could be that vertical / horizontal isn’t the issue, and instead the bigger issue is just which companies are well-run and make good products. Regardless of business model, MS and Intel were just better run companies back in the 80s and 90s than most of their competitors. Now Apple appears to be the better-run company. I’m not sure that it’s any more complicated than that.

    • mutarasector
    • 12 years ago

    “I can only think that the reason this rumor would have any credibility is that the me-too crowd in business has now decided that vertical integration is the trendy new thing. ”

    Vertical integration may be trendy, but it’s hardly new to the computer industry. Jack Tramiel did it way back in the Commodore era when Commodore purchased MOS Technologies.

    • esterhasz
    • 12 years ago

    Yeah, since Apple has shown how vertical integration can be a very viable strategy, everybody seems to be at least toying with the idea. It does needs a very strong vision though to pull it off and while I would have understood the reasoning behind Oracle buying AMD (become a real one-stop database tech vendor), I do not see an obvious direction where Dell could take that acquisition. For vertical integration to work, you need a really strong software proposal and if I look at Dell’s recent activities in the mobile sector, this is most definitely not their strong point. Although – and this is very difficult to judge – it is emerging markets where expansion is happening (and if you look at Intel’s revenue sheet, also already most of the revenues) and Dell has traditionally worked towards commodification. Buying AMD may allow for a strong value proposition in a sector where you have to squeeze out your profits from very small margins. And the stock is most certainly undervalued at the moment…

    • esterhasz
    • 12 years ago

    you must be baffled a lot, then…

    • TurtlePerson2
    • 12 years ago

    I wasn’t aware that Dell had so much money sitting around. I think that it would make more sense for HP to buy AMD. HP has always done more R&D than Dell, which is mostly a manufacturer of sorts.

    • albundy
    • 12 years ago

    how are these minuscule tiny companies able to even afford a down payment? Dell makes nothing. they pay manufacturers to slap their name on other brands and trick customers by calling it their own. i dont see any way that they can afford this.

    • thermistor
    • 12 years ago

    Someone in the comment thread mentioned vertical integration. I agree with that idea to some extent; many industries used to be vertically integrated.

    Short-term this would guarantee market share and presence for AMD CPU/GPU products, assuming that there would be a phase-out of Intel product across the product line.

    Long-term the picture is less clear. Would customers in business and consumer shun Dell’s offerings as being from that ‘other’ CPU manufacturer?

    Of course the irony is great considering Dell got its wrisp slapped a few years ago over the sweetheart Intel-only CPU deal.

    • bittermann
    • 12 years ago

    Intel would not sell directly to their competition…what don’t you get about that logic? Intel has so many other options that it would hardly slow them down…

    • thanatos355
    • 12 years ago

    This is completely fuzzy logic, at best. Intel is in the business of selling processors. Dell is one of the top pc vendors. Intel is not, and would not, shut off that kind of revenue stream. If they tried, their shareholders would fire the entire board of directors, leaving them open for Dell to acquire as well. 😉

    • willmore
    • 12 years ago

    Let’s see the logic here. They’ll save money because they won’t pay the markup on the CPU, right?

    Okay, when AMD is an external company, that makes sense–if they could get CPUs at cost, then that would be a win. AMD would make no profit, but Dell would make more. But, if Dell ownes the whole pipe, they you’re just moving profit from one division to another. There is no money to save.

    This is a classic mistake in the ‘hey, let’s merge and save money’ game.

    • NeelyCam
    • 12 years ago

    Yep – business is business.

    • Sam125
    • 12 years ago

    Funniest thing I’ve read all day lol!

    • anotherengineer
    • 12 years ago

    lolz

    That’s the best laugh I had in awhile.

    If they did they could get chips at cost, but …….o wait, I guess they are not getting the Intel “rebate” anymore??

    Anywho, I can’t see anyone buying AMD in the NEAR future, especially Dell.

    • ludi
    • 12 years ago

    What does being American owned have to do with anything?

    • grantmeaname
    • 12 years ago

    Not to mention that HP would become reluctant to buy so many AMD CPUs.

    • Suspenders
    • 12 years ago

    What hate comment are you talking about? Why is it hateful to say that you want a company to be American owned?

    • Suspenders
    • 12 years ago

    We have yet to see if they’re more competent. They’re advantage so far has been their deep pockets, not competence per se.

    • dpaus
    • 12 years ago

    Amd is barely profitable at their current sales volume. What’s going to happen to their sales to all other PC vendors when they’re ownerd by Dell?

    • ludi
    • 12 years ago

    A boat and a boat anchor go great together. Two boat anchors, however, should not attempt a JV.

    • PixelArmy
    • 12 years ago

    I understand the agencies/depts/etc. Guess “authority” was a poor word choice. The OP sounded like they were talking about intervening to prevent them from being bought out in general (not just to Dell). I’m just curious as to what grounds/laws/regulations the OP thinks a merger would be stopped by. This will differ case by case, but I’m just not seeing any issues.

    Maybe it being anti-competitive (to other OEMs if acquired by Dell), but that seems like a big stretch. (Obviously, we’re excluding blatant things, say if Intel were to buy ’em). Then again, the gov’t can just drum up something vague about “interstate commerce.”

    • TravelMug
    • 12 years ago

    Those tray prices do not mean much for OEMs in particular. If you compare them to the Newegg prices for example, you can see that the Newegg price is lower in almost every occasion. If Newegg can do this and make profit then an OEM with several 10K and 100K order quantities can also. The system price is alos going considerably up when you opt for a faster CPU. You can easily check this on the Dell site. The pricing is also a lot of times based on their order and stock quantities. You can get a very good CPU with barely any price increase, but pay through the nose of a one SKU step up (of maybe as little as 133Mhz).

    What I was saying was that if they sell even let’s say 30% of the home desktop systems with AMD CPUs, the savings they would make there plus the acquisition costs do not offset the loss they would get by Intel increasing their price for them for their CPUs which go into the other 70% of home desktop systems. (BTW – numbers are made up and most probably optimistic regarding AMD share). Not to mention the increased costs for the office desktops and workstations where they are I’d guess almost exclusively Intel, plus the servers where based on the latest market results Magny-Course has 5% share and AMD has 10-15 (lazy to look up) overall.

    It simply does not make sense.

    • sparkman
    • 12 years ago

    Technically yes, but why would anyone think a PC company merging with a chip company would involve anti-trust issues? A monopoly would not be created in either market by the merger.

    If anything, the resulting Dell+AMD hybrid would be better positioned to compete with Apple, who doesn’t make their own chips (for the desktop… yet) but does make their own desktop PC’s.

    • digitalrogue
    • 12 years ago

    The Federal Trade Commission would ultimately have to approve the merger. The Justice Department could investigate to determine if there would be any violations of anti-trust laws as a result of the merger.

    • deinabog
    • 12 years ago

    I don’t see how this would be good for either company. Since it’s just a rumor I guess we’ll have to wait and see what happens.

    • OneArmedScissor
    • 12 years ago

    Boy, wouldn’t it just be terrific if AMD were preparing to restructure all over again…

    • OneArmedScissor
    • 12 years ago

    “The CPU costs are small for virtually all systems.”

    I guess we don’t really know what the big OEMs pay, but the 1,000 unit tray prices on a lot of non-Pentium/Celeron branded Intel CPUs are 1/3 to almost 1/2 of the retail price of many laptops they end up in. I can’t count how many times I’ve seen a $600 laptop with a $200 CPU or even an $800 laptop with a $400 CPU.

    • just brew it!
    • 12 years ago

    WTF… did I wake up on Bizarro World this morning? This rumor makes very little sense to me, and I don’t think a Dell-AMD merger would end well for either company.

    • flip-mode
    • 12 years ago

    Haters? I’d think anyone that’s not a douche would hate what you said, but, whatev.

    • PixelArmy
    • 12 years ago

    Under what authority would the gov’t intervene?

    • bdwilcox
    • 12 years ago

    And the breaking news after the buyout? [b<]Intel acquires Dell.[/b<]

    • bittermann
    • 12 years ago

    They would lose 90% of their business base plus some consumer because lets face it, for good or bad reasons they want Intel cpu’s inside. We know darn well Intel would cut them off as soon as possible.

    • LSDX
    • 12 years ago

    For handhelds, yes, for sure.
    For Full-HD+3D Games possible not the next generation, but maybe later.
    Right now ARM cpus are great for energy efficient products, but for set-up consoles this isn’t a crucial factor.

    • kamikaziechameleon
    • 12 years ago

    Wow. I wonder how this would augment the cost of AMD prices for consumers if they upped their volume through such a aquisition. Dell is kinda flirting with disaster though so I feel a aquisition like this could spell AMDs demise as easily as its success.

    • blastdoor
    • 12 years ago

    Nah, I bet the next consoles (if there even are next consoles) will be ARM-based.

    • jcw122
    • 12 years ago

    How would anyone on Wall Street know about a merger unless there was a leak of inside information = insider trading.

    • LSDX
    • 12 years ago

    AMDs’ new (and maybe Intel’s futur) APU are a much bigger thread to another company, that is selling millions of CPU in present generation video game consoles. Without an integrated low cost solution from IBM, I suppose we will see MS get back to x86 for its next Xbox, Sony and Nintendo possibly joining. Apple has shown it is possible to switch from Power to x86, just as MS has proven the other way ’round goes too.

    At the moment Cell’s SPU aren’t really a match for an integrated CPU+GPU.

    • Corrado
    • 12 years ago

    The CPU is the only component that Dell can’t get made to its EXACT specifications. They get custom motherboards, their own OEM versions of video cards, ram is commoditized, power supplies and cases are exactly what they want them to be.

    • khands
    • 12 years ago

    I don’t think the government should bud in here, at the same time I also think AMD should figure out what the hell it’s going to do and do it.

    • shank15217
    • 12 years ago

    This would be the death of another great Technology firm.. AMD’s board is being run by idiots and fat pockets. Jerry Sanders should have never left the helm. When AMD is no more.. it will be a dark day indeed.

    • blastdoor
    • 12 years ago

    I can only think that the reason this rumor would have any credibility is that the me-too crowd in business has now decided that vertical integration is the trendy new thing. If HP is rolling their own mobile OS, why not have Dell make their own processors?

    Of course, the practical realities of such an acquisition are difficult to fully grasp (at least for me). Would Dell still sell AMD processors to other OEMs? Would other OEMs even want to buy them? Would Dell continue to also use processors from Intel?

    I can’t rule out the possibility that Dell would do this, just because I think they feel a certain desperation right now and vertical integration is the new buzzword. But making such a merger work would be really challenging.

    • blastdoor
    • 12 years ago

    USA! USA! USA!

    edit —

    incidentally, the irony of your statement about how “haters are going to hate” is exquisite given the content of your anti-everybody posts.

    • l33t-g4m3r
    • 12 years ago

    What’s with all the sellout rhetoric? Can’t a company run itself anymore? Another buyout will just completely destroy what little independence and innovation is left. I’m fairly free market and anti-regulation, but I think the Gov. needs to intervene here and say no more. AMD needs to just man up and run itself better. 3rd parties stay out.

    • Game_boy
    • 12 years ago

    This. ATIC look more competent than Dell. They managed to avert AMD’s bankruptcy, create an actual leading foundry out of AMD’s capacity with an agressive construction and process roadmap, and it will pay off for them in the long term.

    Dell has been losing marketshare and generally not been innovating.

    • TravelMug
    • 12 years ago

    They would lose much more than gain. The percentage of systems they are currently selling (in all market segments) with Intel CPUs does not allow for such foolishness. The CPU costs are small for virtually all systems bar the highest end and are ultimately paid for by the customer anyway. It would also not get rid of market segmentation, so they would not be giving away higher SKU processors for nothing.

    • TaBoVilla
    • 12 years ago

    what the F, what’s up with all these recent trollish unfounded un-american hate comments?

    • Silus
    • 12 years ago

    Doesn’t make much sense that it’s Dell and not Oracle or ATIC. But time will tell.

    • Grigory
    • 12 years ago

    I just pray to The Great Agnostico that AMD doesn’t get destroyed somehow and Intel makes us all their bitches.

    • Corrado
    • 12 years ago

    Because they’d pay NO markup at all for the CPUs if they bought AMD. They’d spend a bunch of money in the next few years, but then they’d end up being able to tailor chips to exactly how they want them and not pay any markup.

    • tejas84
    • 12 years ago

    This +1

    I hope Dell buy AMD and bring them back fully into US hands.

    Haters gonna hate what I said but I don’t care.

    • Rikki-Tikki-Tavi
    • 12 years ago

    “Report says Dell might seek to acquire AMD”

    “Salt Prices at All-Time High”

    Seriously: Dell is profiting hugely from the competition between AMD and Intel. Why would they pay money to give up their “lucky third” position?

    • wingless
    • 12 years ago

    Heck, at least it’s an American company and not ATIC.

    EDIT: Did I mention I was the FIRST POST on this topic today? USA USA USA!

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