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Newest Reuters wire claims IBM is considering a purchase of struggling AMD

Few will argue that AMD’s image and profitability are not what they used to be. AMD was having issues prior to its purchase of graphics maker ATI and things have only worsened since the ATI purchase.

DailyTech reported last week that AMD posted a massive loss for Q4 2007 of $1.72 billion while rival Intel posted significant profits across its operations. Between new architectures and aggressive pricing, a shakeup in the microprocessor arena is almost certain for 2008.

Reuters now reports IBM is possibly considering a buyout of floundering AMD and some say this would be an ideal time for the buyout with AMD stock prices at a low. IBM and AMD currently have a research and development expense-sharing deal in place. This is not the first time rumors of an IBM buyout of AMD have circulated.

Other companies have their eye on AMD as well. Texas Instruments and Freescale have both expressed interest in turning AMD around. 

Analyst Ashok Kumar from CRT Capital Group claims, “[IBM buying AMD is] a pretty low-probability event because IBM is moving away from hardware and manufacturing and moving to software and solutions. I don't think IBM wants the bragging rights to go up against Intel."

IBM sold its hard drive making business to Hitachi in 2002 and sold its PC business to Lenovo in 2005. According to Kumar an IBM purchase of AMD would “destroy shareholder value for IBM.





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