AMD / ATi Merger

[Harper]

http://www.dailytech.com/article.aspx?newsid=3453

AMD Board Approves Acquisition of ATI, Bankers Confirm

Reports claim a $5.6B deal is about to close on an unprecedented merger

According to a report in The Globe and Mail, the board of directors at AMD has allegedly approved the takeover of Canadian graphics firm ATI Technologies. The report claims that the information was released by an investment banker that was part of the discussions. According to other sources, AMD executives were also seen at ATI's headquarters in Markham, Ontario. The report indicated that AMD is considering a $5.6 billion takeover bid for ATI.

Speculation and rumors have run rampant over the last several months about the possible merger between AMD and ATI, but no concrete details have been revealed. According to reports on ATI's share prices, the company's shares have been trading at double the usual volume today. Analysts said that AMD would be making an offer of 20 to 40 percent premium to ATI's current share price. ATI shares traded at $16.12 on the NASDAQ today during after hours, which is up 39 cents from yesterday's closing.

Reuters has also picked up on the story, claiming that "Some analysts have questioned the rationale for an AMD-ATI merger, and others were surprised that the speculation received no attention from analysts during AMD's earnings conference call on Thursday." DailyTech had punched in for question during the investor conference call on Thursday, but a moderator would not respond.

According to Eric Gomberg, an analyst for investment bank Thomas Weisel Partners, "there has been considerable industry speculation that AMD may pursue an acquisition of ATI Technologies, although such an outcome is by no means certain." Gomberg's comment came in earlier this week, but word circulating around investment bankers who are aware of the talks between ATI and AMD surfaced just several hours ago.

Recent reports indicated that Intel roadmaps no longer included ATI chipsets. Although Intel had been producing motherboards using ATI logic, upcoming boards like those that support Core 2 processors are void of any chipset from ATI. Interestingly, ATI and Intel had agreed to several cross-licensing programs that allowed them to take advantage of some of each other's technologies. Several analysts however, indicated that the merger between AMD and ATI to be "out of strategy for AMD and out of focus. Stupidity is no barrier to tech mergers."

A report in the Wall Street Journal confirms the talks between AMD and ATI (subscription required) today. Although the deal is not final, the report said that representatives from both companies declined to comment.

AMD has previously indicated that it would embrace embedded processor technologies for its Torrenza platform -- some of which would include math and physics co-processors. However, the company has recently exited all non-x86 processor design.

http://www.dailytech.com/article.aspx?newsid=3468

AMD-ATI: A Done Deal

The wait is over, ATI and AMD have sealed the deal

The official AMD-ATI announcement is still three hours away, but AMD sent the newswire out a few hours early. For those still in doubt, occasional DailyTech blogger and T-Break Editor-In-Chief Abbas Jaffar Ali was able to sneak an image from the conference already; and a picture is worth a thousand words.

AMD announced the deal is valued at around $5.4B USD: $4.2B in cash and 57M shares of AMD common stock (valued at a little over $18 USD per share as of July 21, 2006) will be used to purchase the ATI in a takeover bid. A little more than half of the cash to be used from the transaction will come from a $2.5B USD loan from Morgan Stanley, which was the bank quoted Saturday when the news of this story first broke. This is in addition to the $5.8B USD the company plans to invest in Dresden, Germany over the next three years and the $3.5B USD slated for a new semiconductor facility in Luther Forest, New York. ATI was a fabless semiconductor company, meaning the company relied completely on third-party facilities to manufacture its ASICs. Although AMD certainly will have semiconductor fabrication, the company is already hard-pressed to keep up with CPU demand. AMD President Dirk Meyer emphasized that AMD will not use its in-house facilities for ATI semiconductors at this time, especially with the TSMC and UMC opportunities that are already available.

AMD's press release also claims that the combined company would have had approximately $7.3B in sales over the last four quarters and just under 15,000 employees. The new company keeps the AMD headquarters in Sunnyvale, California, and the previous ATI headquarters will act as a business hub for part of the company. ATI's previous CEO Dave Orton will act as executive vice president of the ATI division and report directly to Hector Ruiz and Dirk Meyer. AMD's press release indicates that ATI will, for now, act as a division of AMD. In the event the takeover falls through, ATI must pay AMD a termination fee of $162M to cover AMD's initial investments and lendings. AMD CEO Hector Ruiz also confirmed that there will not be any significant layoffs as a result of the takeover.

The merger is more than a small shakeup for the industry. NVIDIA, AMD's number one supplier of core logic for AMD platforms, is also a direct competitor of ATI for discrete and integrated graphics. Jaffar Ali was able to reach NVIDIA's Director of Product PR EMEA, Luciano Alibrandi, who claims "Our PC strategy is to be the leading innovator of GPU and core logic for both Intel and AMD platforms. GeForce is the #1 GPU brand. Quadro is the #1 professional and workstation graphics brand. nForce the #1 core logic brand. And SLI is the #1 multi-GPU brand. They are specifically sought out by end users of both Intel and AMD processors. Today's announcement only enhances our strategy." It appears definite that NVIDIA will approach the Intel market with much more vigor than in the past, though no NVIDIA representatives would comment on whether or not the merger will result in a scaling back of NVIDIA AMD components. AMD President Dirk Meyer added "With regard to GPUs: I fully expect ATI's solutions to compete with NVIDIAs on the AMD platform."

Microsoft had already voiced its opinion in the AMD press release when Jim Allchin, Co-President of MicrosoftÂ’s Platforms and Services Division, claimed "We're excited by the potential of what AMD and ATI can deliver together to enhance the Windows Vista experience for our customers even further." Since it may take years for the AMD takeover to really kick into effect, it may take some time for customer-ready products to hit store shelves.

The addition of in-house core-logic also strengthens AMD's presence in the server market. A portfolio manager for AMD, who wishes to remain nameless for now, told DailyTech " doubt AMD will have the price flexibility to bundle ATI chipsets (18% gross margin) until they bring the manufacturing in-house. Available capacity for that is still down the road." The same manager went on to claim that without total reliance on Broadcom for server core-logic the company will have much better success securing major deals for large quantities of server products. All of these products will now be obtained through the single AMD channel instead of multiple vendors -- the company previously prided itself in diversification of channel solutions until the Dell picked up AMD to provide server products.

The deal still needs to receive approval from the AMD and ATI shareholders, and then pass FTC and Canadian Competition Bureau approval. AMD recently announced that the company would cut back its Geode research, while almost simultaneously selling the AMD Alchemy division. This departure of low-end x86 and non-x86 presence is in stark comparison to ATI's recent purchase of Bitboys Oy. Many of the Alchemy processors AMD recently spun off competed (at least indirectly) with ATI Imageon products -- many of which will show up in the new Nokia devices and digital TVs. AMD will also gain a significant presence with the Microsoft XBOX team, as ATI designed the XBOX 360 graphics processor and the XBOX 360 HD DVD H.264 decoder.

ATi and AMD. This was rather unexpected. Especially with the way that nVidia was producing a lot of nFORCE chips set for AMD Platform Motherboards.

 

[Harper]

http://www.crn.com.au/story.aspx?CIID=57239&eid=4&edate=20060725

AMD: we're not manufacturing motherboards

Advanced Micro Device's potential acquisition of ATI Technology gives the chip maker a leg-up in maintaining a stable image platform for corporate buyers, but it doesn't mean there will be branded AMD motherboards anytime soon.

Pat Moorhead, AMD vice president of global marketing, offered a "definitive no" when asked if the US chip maker would be developing its own line of motherboards as a result of the ATI acquisition.

"It really doesn't add anything more to the equation over and above the two companies coming together," he said. Instead, AMD's tight integration between its CPU and ATI's chipset that controls many of a PCs subsystems will boost AMD's Corporate Stable Image Program (CSIP), he said.

AMD said it would acquire ATI Technologies for US$5.4 billion in cash and stock. If the deal is approved by shareholders, it is expected to close in the fourth quarter

A cadre of systems builders and VARs have long called for AMD to manufacture its own motherboards and chipsets to help control stability and quality for corporate and some government buyers, where serviceability and reducing IT support costs are crucial.

As AMD worked to boost its presence in the commercial market, it launched the CSIP program late last year and in June said it would add to that Nvidia Business Platform, designed for its own chipsets with integrated graphics.

Todd Swank, director of marketing at Nor-tech, said the system builder has long been encouraging AMD to make its own motherboards. He said the service and support provided with AMD rival Intel's own branded stable image platform, with 24-hour hour replacements in some cases, is a necessity when dealing with larger corporate clients.

Doug Phillips, vice president of products and solutions at Seneca Data, a system builder. agreed. "Eventually AMD will have to get to the point where Intel is" when it comes to offering a stable branded platform that includes the CPU, chipset and motherboard for the corporate market, he said.

Nevertheless, both system builders said ATI's acquisition is a good place to start. "The big take away is we have been telling AMD that they have to control their part of the ecosystem," said Phillips.

You think that AMD would start thinking about doing their own motherboard just like what intel has been doing for year.

 

[Harper]

http://www.crn.com.au/story.aspx?CIID=57320&eid=4&edate=20060726

Opinion: AMD's ATI buy throws cold water on Conroe
Rumours have been flying since Computex that AMD was going to buy ATI, and the industry slowly convinced itself that it made sense and then it happened, and everyone lost the plot.

It was the cold water AMD needed to throw over the Conroe party, and as a result, here they are in their own little column.

ATI was bought for US$5.4 billion dollars in cash and shares, and AMD needed to take out a US$2.5 billion dollar loan to do it. Keep this in mind next time you need a new car.

The deal is still subject to ATI�s shareholders agreeing (which is likely to be just a matter of process), but more importantly, has to be passed by the American government. We daresay the Canadian government will have a few things to say as well.

Should all go peachy, the ATI name will disappear forever and both product sets will be marketed under the AMD name. Should things go pear shaped and the companies end up staying separate, ATI will pay AMD a cool US$162 million for their trouble.

The acquisition allows AMD to play against Intel on a level playing field � giving them access to both chipsets and integrated graphics across both the PC and consumer electronics spaces. Not surprisingly, some of ATI�s licenses with Intel have not been renewed.

ATI also stands to benefit from AMD�s own manufacturing fabs, which should hopefully mean cheaper production costs � however at this stage this is merely speculation, and will be some time before it will happen, if indeed it ever does.

More exciting though is the potential architectural changes that may hit the PC over the next two to five years as a result of the merger � with direct control over such powerful graphics resources, AMD has the potential to reshape the entire landscape as a result � or divide it, if they don�t watch their step.

No one really seems worried about Intel, it�s assumed that big blue can look after itself quite well already. Who else could pull off the comeback that is Conroe, and force AMD into such an incredulous position in the first place? Nonetheless we�re sure we can hear the whips in the research department cracking that little bit harder.

The bigger concern is NVIDIA, who arguably gave AMD their leg up into the industry thanks to their dominating nForce platforms, and it probably isn�t very happy right now. NVIDIA doesn�t necessarily play well with Intel, but depending on how good AMD�s diplomats are, it may be forced into playing a little nicer with its Santa Clara partner. One thing is certain � there�s now a whole new rule set being written that the graphics world will need to adhere to.

It�s unlikely any one will play hard and fast � we may see a few preliminary moves, but until the merged monolith that is AMD and ATI play their first hand, expect most people to tread lightly and carefully, and even then, don�t expect big changes for a number of years.

In the short term, we expect ATI will at least help AMD to flesh out their anorexic - Live! offerings in the face of Intel�s VIIV. In the long term, who knows where the GPU itself will head?

We await the answers, and AMD�s next attempt at the CPU performance crown.

It's pretty much expected that the ATi branding is going to go
However I would assume that some of heads at nVidia are fuming about this AMD - ATi Merger.

With will be rather interesting to see when we have both the head of a CPU prodiver putting there head together is a GPU prodiver. I will be interesting ot see what future holds for AMD ATi.

 

[Him]

AMD said it would acquire ATI Technologies for US$5.4 billion in cash and stock.

AMD announced the deal is valued at around $5.4B USD: $4.2B in cash and 57M shares of AMD common stock (valued at a little over $18 USD per share as of July 21, 2006) will be used to purchase the ATI in a takeover bid. A little more than half of the cash to be used from the transaction will come from a $2.5B USD loan from Morgan Stanley, which was the bank quoted Saturday when the news of this story first broke.

Imagine... $4.2 billion in cash. HOw much would that weigh? ****, one can only dream.

I dont use AMD nor ATi, for reasons I dont want to discuss (There arent any, I just use Intel and have for a long time, no money to change everything over to AMD right now)

 

[weemanpow3]

Im glade that happened because now they can have very fast chip in the videocard