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AMD will now own about 34.2% of the spinoff

To say it has been a tough year for the computer industry would be an understatement. AMD has been particularly hard hit, despite being the second largest chipmaker around.

In October, AMD announced that it would be spinning off its chip making facilities into a different company with AMD holding 44.4% of the new chip making company. The spin off resulted in a suit brought against AMD by rival chipmaker Intel over alleged license violations caused by the spinoff of AMD's processor making arm.

AMD announced this week that in an effort to reduce its manufacturing costs and adjust to the current state of the economy it would own even less than the previously noted 44.4% of the chip making spinoff. The majority owner of the spun off chip making division was the Abu Dhabi-based Advanced Technology Investment Company (ATIC) and a minority owner was Mubadala Development.

Amendments between AMD and ATIC will have AMD owning 34.2% of the chip making arm and ATIC grabbing 65.8% of the Foundry. An AMD representative said the sale was due to "changing economic times." AMD is fighting for its survival in the face of falling profits and increased competition. AMD announced this week that it was cutting revenue projections by 25% for Q4 2008.

Other amendments between the owners of the Foundry include a restructured agreement that allows Mubadala to purchase 58 million shares of AMD common stock at a revised purchase price equal to the lower of average closing price per share on the NYSE during the 20 trading days prior to and including December 12, 2008; or the average closing price per share of AMD common stock on the NYSE during the 20 trading days prior to the transaction close date.

AMD released a statement saying, "All other material economic terms of the transaction agreements remain unchanged. ATIC will still invest $2.1 billion to purchase its stake in the Foundry Company, of which it will invest $1.4 billion directly in the new entity and will pay $700 million to AMD."



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RE: My prediction
By quiksilvr on 12/9/2008 12:28:36 PM , Rating: 5
If that happens we will be TOTALLY screwed in the CPU market. And if they "take ATI with them" we will be TOTALLY screwed in the GPU market. A lack of competition leads to a lack of innovation which in turn means a severe technological evolutionary slowdown.


RE: My prediction
By 325hhee on 12/9/2008 12:37:15 PM , Rating: 3
Just remember, Nvidia released their GT260 and GT280s, and said they're being priced as low as possible, and they were barely making a profit on those cards.

ATI had a lot of press around their HD4xxx series. And when the 4850s and 4870s came out, and proved their worth, miraculously they had an immediate $100 price drop on the GT280, and then another $50, and another price drop after that. Within a two week time?

So, without ATI, we'd be stuck with Nvidia's $599.99 pricing on high end vid cards, instead of $300. Do you really want that? I don't, I do not have that kind of money to throw around.

Without competition, we'll all be paying apple prices for everything. Come on, look at the hardware they use and the prices they set for their hardware, you can make a PC with the same specs for a few hundred dollars less.


RE: My prediction
By Bateluer on 12/9/2008 12:40:11 PM , Rating: 5
Not to mention high prices. Anyone remember when AMD didn't have a high end competitor to Intel's chips? Intel's P2s and P3s were 600 to 800 dollars, with their 'low-end' celerons priced between 100 and 300. It was only 5 months ago that Nvidia wanted to sell you a GTX 280 for 650 dollars, and the 8800 Ultra for 800 several months prior.

AMD is critical to the industry and only a complete fool would want to see them out of business.

In all fairness though, Bankruptcy does not mean they'll be out of business, it means they will reorganize and restructure. Since its their CPU portfolio that's dragging them down, but also contains their most prominent products, I don't know how much restructuring they can do.

Perhaps they can appeal to US Congress with some demonstration boxes of their upcoming Phenom IIs?


RE: My prediction
By Ringold on 12/9/2008 2:25:51 PM , Rating: 2
quote:
In all fairness though, Bankruptcy does not mean they'll be out of business, it means they will reorganize and restructure. Since its their CPU portfolio that's dragging them down, but also contains their most prominent products, I don't know how much restructuring they can do.


Right, some of this talk sounds like the talk about Detroit. Big companies just don't disappear in to the ether.

I've said it for years now. AMD will roll over; whether or not it enters bankruptcy or not I don't know. But someone with deep pockets, from the Middle East or Asia, will come in and buy them out. With access to fresh piles of cash, hopefully AMD could then make investments in its future. There's no way nobody would buy it or try to make a go at entering the busienss; unlike the airline industry, there really is a lot of money to be made here. AMD offers a (cheap) way to enter a market that otherwise is nearly impenetrable.

I'm looking forward to it. The sooner AMD fails and gets new owners the sooner we'll get new products.


RE: My prediction
By FaceMaster on 12/9/08, Rating: 0
RE: My prediction
By Clauzii on 12/9/2008 8:55:23 PM , Rating: 2
IF AMD should fail (which I think they do not!), ATI would be nice on their own as before, if that should be possible. They are doing well now as they did well before AMD acquired them.

So at least we might be less unfortunate and end up with ATI GPUs as before? And even though AMD should be bought by some other buyer, one could hope for that the engineers and such, will be given a new (and maybe even more) solid foundation for their work.

/Of course it's not going to happen since the Dragon will hopefully fly soon :D/


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