AMD planning ATI bid, sources say

By TheNay
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.Ark

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I was with the Vice President of nVidia a couple week ago. He was giving a lecture to us (a group of about 20)... He seemed very confident about his company along with a couple other staff members that were there and they are very proud of their progress and stock growth so far.. I dont think they would let any company buy them.. :/

Edited by .Ark
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Hurmoth

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I know that everyone is saying that an AMD/nVidia matchup would be smarter, but that doesn't look to be happening, so let's leave that aside for a moment.

My one question with all of this is how will this affect nVidia's relationship with AMD?

Experienced

andresjk

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My one question with all of this is how will this affect nVidia's relationship with AMD?

Thats my question too, cuz there are more SLI mobos for AMD chips than for Intel, so now nVidia-AMD is good, maybe they have an agreement when AMD bought ATI.. dont know

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jerry

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This will answer most of the points you all brought up, Rahul Sood (President, Voodoo PC) on his blog:

AMD + ATi: One + One = Three

I am busting at the seams here, I have been holding my opinions on this potential ATi + AMD deal for many months now. Obviously everyone knows Intel’s latest product offering is excellent and news on Conroe/Woodcrest is humming along – but this deal with ATi + AMD has positive cataclysmic effects on the entire industry. This deal slightly overshadows any news going on in our industry at the moment.

I am going out on a limb – I, like many others, believe this deal is imminent and I am offering up my reasons why I believe this deal makes sense.

As many of you know I have always said that ATi is a target for acquisition, and I truly believe they are a diamond hidden deep in the rough – and with a little bit of polishing this acquisition will go down in history as the best move that AMD ever made. ATi + AMD = a go big strategy that will shake the very foundation of our industry.

Based on the feedback I’ve received from many analysts, I am going to assume that most people will not be able to make sense of this deal. The following obvious questions come to mind;

1) Why would AMD buy ATi, why not Nvidia? Isn’t Nvidia a stronger company?

The answer this question requires some methodical strategic thought. This is not unlike a chess game – and I believe that AMD is positioning its pieces carefully before it works its way over to the king.

- ATi is generally undervalued. They have been trading in a tight little window for what seems like forever. ATi does not have the market prowess that Nvidia has; quite simply Nvidia knows how to manage their relationships with Wall Street better than ATi does.

- ATi is very much like AMD was 5+ years ago before the new AMD management came on board and started to fix the company. Under Hector Ruiz, new management leveraged the awesome innovations that AMD had under the hood and turned the company on its head. For the last 3+ years AMD has been the undisputed leader in almost all areas of the market.

- ATi has some killer technologies under their hood – not least of which are publicly available now. ATi is the best third party notebook chipset manufacturer in the world. They understand power management like no ones business, and they have the capabilities to build killer platforms for mobile platforms. There is no denying that the Intel Israeli team is talented when it comes to designing some killer platforms - especially for notebook. ATi + AMD under one roof = mobility platforms that will rival anything that anyone else can put out.

- ATi’s handheld business is strong and AMD has some great OEM relationships to help raise this portfolio.

- No need to talk about the benefits of XBOX 360 + Nintendo Wii, I think you all know what this translates to.

- ATi’s decentralized organization could use a big tune up. They are very easy to work with, and they are incredibly flexible – this acquisition will come as a welcome challenge to their team.

- ATi has polished their skills in platform chipsets, and with a little bit of honing they could be the next big force in the market. With AMD building their own platforms “in house” via ATi I think we’ll see some pretty amazing pre-engineered products.

- It’s not the time for Nvidia yet: If anyone knows Nvidia they know that their CEO is very much in control of the organization. Nvidia is also much more expensive than ATi, and rightfully so – Nvidia has been making all the right moves for many consecutive months. Nvidia is known for their aggressive business moves, and those who know Jen-Hsun will tell you that he wouldn’t let anyone buy the company without him remaining at the helm of the larger organization. Think about the future opportunities here –- We could see the beginnings of a much larger organization.

2) Why is AMD fixated on the graphics market?

Long term thinkers already know that CPU and GPU computations may eventually end up on one piece of silicon. Back in the days of the separate math co-processors industry “pundits” didn’t believe they would ever morph into one – but those in the know realized that this bottleneck needed to be cut out as soon as possible. In the case of CPU + GPU the possibilities are endless – imagine a multi-core piece of silicon where one core handles massive CPU computations while another handles graphics, and perhaps another handles the traffic between the multiple cores.

3) Will Nvidia react negatively and work exclusively with Intel?

Hardly. There is no way that AMD will alienate Nvidia. In fact I am quite confident that Nvidia will actually work closer with AMD, and perhaps share and co-develop graphics in the long run. There are no ego’s at AMD or ATi – if they feel it’s good for their shareholders and their customers to work closer with Nvidia they will do it. AMD knows part of the reason for their success is the fact that they offer choices to their customers. Also, the worldwide demand for chipsets is higher than what ATi could produce so obviously Nvidia will still play a major role in AMD based machines.

AMD has some great platform solutions slated for next year, including server, workstation, notebook, etc. I can’t get into too many details, but in my mind AMD + ATi = one large company with the potential of becoming a massive juggernaught. Any debt that AMD incurs to make this transaction a reality will be short lived. The long term outlook on AMD is unbelievable if this deal is approved – this company will go big, and those along for the ride are going to reap huge rewards.

As usual, initial reactions to change are always negative - but long term thinkers who truly understand the technology will tell you this deal is the one way that AMD can turn the tides in their favor.

On another note, someone needs to write a book on AMD, I’m telling you it would be a best seller. The management over at AMD really understands the future of technology and the needs of their customers. I think a book about how they did it would be a very interesting read.

I welcome any and all of you to visit my blog at www.rahulsood.com for more details on this transaction as it progresses – and I welcome all comments on all sides of the deal.

Edited by jerry
Proficient

dw2003

Posted
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Advanced Micro Devices Inc., said it will make a "significant" announcement Monday, amid news reports that Intel Corp.'s biggest rival for PC microprocessors plans to pay more than $5 billion to acquire a top graphics chip maker.

AMD and ATI Technologies Inc. on Sunday were wrapping up talks to close the deal, which called for Sunnyvale-based AMD company to pay $5.4 billion, mostly in cash, the Wall Street Journal reported on its Web site.

http://news.yahoo.com/s/ap/20060724/ap_on_...d_acquisition_1

<rubs hands in anticipation>

edit:

In a transaction that will reshape the semiconductor industry, Advanced Micro Devices Inc. agreed last night to buy ATI Technologies Inc. for $5.4 billion in cash and stock, people involved in the deal said.

http://www.nytimes.com/2006/07/24/technolo...nyt&emc=rss

Looks like its official

Edited by dw2003
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Fourjays Veteran

Posted
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Posted
Long term thinkers already know that CPU and GPU computations may eventually end up on one piece of silicon. Back in the days of the separate math co-processors industry “pundits” didn’t believe they would ever morph into one – but those in the know realized that this bottleneck needed to be cut out as soon as possible. In the case of CPU + GPU the possibilities are endless – imagine a multi-core piece of silicon where one core handles massive CPU computations while another handles graphics, and perhaps another handles the traffic between the multiple cores.

Interesting, but if you want to update either, wouldn't you be paying for both? So you could have a good "processor" but if you wanted better "graphics" you need a whole new CPU/GPU processor.

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jerry

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Its done.

NEW YORK (Reuters) - Advanced Micro Devices Inc (AMD.N: Quote, Profile, Research), the No. 2 supplier of computer processors, said on Monday it would acquire graphics chip maker ATI Technologies Inc. for $5.4 billion in cash and stock to expand its product mix and grow market share as it battles Intel Corp. (INTC.O: Quote, Profile, Research).

Under terms of the deal, AMD will acquire all of the outstanding common shares of ATI for $4.2 billion in cash and 57 million shares of AMD common stock, based on the number of shares of ATI common stock outstanding on July 21.

AMD said it would pay $20.47 per share for each share of ATI (ATYT.O: Quote, Profile, Research) (ATY.TO: Quote, Profile, Research). That marks a 24 percent premium over ATI's closing stock price of $16.56 on Nasdaq on Friday. The stock added another 7 percent to $17.68 in after-hours trading amid media reports of the expected deal.

The consideration for each outstanding share of ATI is comprised of $16.40 of cash and 0.2229 shares of AMD common stock, the companies said.

Talk of a tie-up between the two companies first emerged in May, but many industry analysts have said it made little financial or strategic sense for AMD to buy ATI outright.

In addition to making graphics chips, ATI also supplies chipsets -- the cluster of secondary chips and interfaces that surround a computer's processor -- for AMD and Intel products.

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Hurmoth

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Well I suppose there is nothing wrong with it, providing we still get good and fair competition between Intel and AMD, and nVidia and ATI. That's all I'm concerned about. :yes:

The way I'm reading this, there won't be an ATI once everything is settled. It will fall under one company, AMD. This isn't going to be like the Dell/Alienware buyout where Alienware is still their own company. At least that's the way I'm reading it right now.

If anyone is interested, you can listen to the official announcement at 8AM ET/5AM PT @ http://phx.corporate-ir.net/phoenix.zhtml?...eventID=1356639

Edited by Hurmoth
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Hurmoth

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I assume in half a year's time, we will be seeing AMD Radeon's on the market.

By the end of the year is what I'm hearing. AMD stated on the conference call this morning that everything should be completed by 4th quarter this year, so we're probably looking a Christmas to early next year.

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jerry

Posted
Posted

The way I'm reading this, there won't be an ATI once everything is settled. It will fall under one company, AMD. This isn't going to be like the Dell/Alienware buyout where Alienware is still their own company. At least that's the way I'm reading it right now.

If anyone is interested, you can listen to the official announcement at 8AM ET/5AM PT @ http://phx.corporate-ir.net/phoenix.zhtml?...eventID=1356639

The collective name of ATI + AMD will remain AMD. They reiterated it just in case people might speculate of a new name, there will still be an ATI business unit. ;)

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