AMD's acquisition last year left many analysts applauding
and enthusiasts shouting for joy. But one question continued to nag all
but the most oblivious -- did AMD overpay for ATI?
ATYT was valued by AMD at $3.2 billion at the time of the October 2006
acquisition. However, according to AMD's most recent December SEC 8-K
filing, the company announced that its goodwill value of ATI Technologies was
AMD's Drew Prairie explains the filing. "Goodwill is the value of ATI
operations minus assets; it's what the company is worth in terms of its
customer relations, intellectual property, etc." Prairie sums it up
succinctly, "During our annual evaluation, which we performed last week,
the goodwill value of ATI is lower than our estimate from last year."
Nicholas Aberle, Caris & Company semiconductor analyst was not caught
off-guard by AMD's announcement. "The only surprise we had was that it
took so long for AMD to admit," he claims, adding that a considerable chunk of
ATI's value was destroyed in the transaction.
ATI Technologies is certainly worth less than when it was last year during the
merger purchase, but AMD won't say how much, yet.
"Dave Orton must be giggling all the way to the bank," adds DailyTech
contributor John Lewis. Orton certainly isn't banking on his 30,000
AMD shares, as the company stock posted a 52-week low today. Yet there
was much speculation that AMD overpaid for ATI Technologies -- a figure
roughly, but consistently, estimated at around 20 percent.
On an analyst call today, AMD CEO Hector Ruiz vowed the company would return to
profitability next year. "We have gone through a very difficult
time, reacted quickly and decisively and we are on our way to really have, I
believe, a phenomenal transition year in 2008," Ruiz said.
Prairie also remains optimistic for the future. "A large part of our
acquisition is not about the products that we have, or will have next
year." He adds, "Looking at it in the last year, or the next
year, is a short time slice to rule out the fruits of the merger."
The first of the products developed solely inside the ATI-AMD merger include
the 2009 Fusion platform, a technology that will place elements of ATI graphics
technologies on an AMD microprocessor.
quote: Either way the market(OEMs) will not touch AMD products due serious reliabilty issues.
quote: AMD Predicts Profitability for 2008