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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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Just a thought.
By Mitch101 on 12/9/2008 1:02:59 PM , Rating: 2
NVIDIA (4.23B) is currently worth a little over 3 times more than AMD now that AMD (1.35B) is selling off its FABS.

AMD K10.5 is a pretty good chip supposedly on par with Core 2 and can clock very high on AIR. Might even give i7 a little fight especially if they can leverage an on board GPU. Bulldozer would be an interesting fight.

Both AMD and NVIDIA seem intent on providing items to leverage the GPU.

We all know NVIDIA's CEO does not like Intel.

The entire mid to high end graphics market (Console and PC) would be owned by a single company but I dont know if it would be enough revenue to pay down AMD's debt but it might. Downside is video cards would go up in price because there is no competition. Apple market share in there too and the Microsoft phone?

Intel could lose SLI license from NVIDIA making AMD/NVIDIA the only gaming rigs in town. NVIDIA would lose Core i7 License but what will i7 be without serious graphics.

If ATI manages to keep up their current pace NVIDIA will be in a lot of trouble. They are already showing signs of problems. With Intel developing a GPU it could be a matter of time before NVIDIA not only has competition from ATI but from INTEL as well.

Intel does not appear to be interested in buying NVIDIA and is going their own way.

Maybe NVIDIA should be looking to merge with ATI/AMD despite the overlap NVIDIA should have cash reserves which would be attractive to ATI/AMD and while NVIDIA is worth more than ATI/AMD currently.

In all I think NVIDIA needs to do something now. If AMD's stock runs up on K10.5 and ATI can manage to compete with NVIDIA then NVIDIA might find themselves with a lot less possibilities.

Again Just a thought.

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