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Report claims AMD has hired a bank to look at selling assets, such as its patent portfolio

Reuters on Tuesday created a stir in the semiconductor side of the New York Stock Exchange when it published a report citing three sources as saying that Advanced Micro Devices, Inc. (AMD), the world's second largest graphics processing unit and x86 chipmaker, hired JPMorgan Chase & Comp. (JPM) to "explore options" including "a sale".

I. Will AMD Sell Its Patents? Reuters' "Sources" Say it Might

The publication cited AMD's struggles to achieve mobile market share as a key driver of the probe.  An unwillingness to pursue mobile options is viewed as a key factor behind AMD's decision to force Dirk Meyer out of the company's chief executive spot in Jan. 2011.

But Reuters did clarify that its sources suggested AMD may merely look to sell a significant part of its patent portfolio and that a sale of the entire company was unlikely.

JPMorgan refused to comment on the rumor. But an AMD spokesperson Drew Prairie directly denied it, stating, "[AMD is] not actively pursuing a sale of the company or significant assets at this time.  AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly-differentiated technology assets is the right approach to enhance shareholder value."

AMD sign
AMD vigorously denies rumors that it is pursuing a sale. [Image Source: AP]

That's a pretty direct denial, although the adjective "actively" could give AMD some wiggle room if it is informally probing such possibilities in secret.

AMD has posted three losses in the last year -- $157M USD (Q3 2012), $590M USD (Q1 2012), and $177M USD (Q4 2011).  AMD did post a small profit in Q2 2012 -- $37M USD.

II. Change is in Store for AMD, One Way or Another

News of a potential sale of some of AMD's assets is not the only surprising news to emerge regarding AMD in recent weeks.  The chipmaker announced two weeks ago that in 2014 it would be releasing 64-bit Opteron server chips, and potentially consumer chips based on ARM Holdings plc's (LON:ARM) proprietary reduced instruction set computer (RISC) architecture, a rival to x86.

The switch to ARM's Cortex-A5x series intellectual property (IP) cores could save AMD on engineering overhead.  Versus the company's current monolithic complex instruction set computer (CISC) x86 cores, which are designed entirely in house, AMD's will only have to tweak, improve, and otherwise performance tune the IP-cores from ARM.

AMD has not announced plans to discontinue development of monolithic x86 cores, but given the high costs and AMD's continual struggles with profit, it would not be surprising to see AMD make that move once it jumps on the ARM train.  For now, AMD's greatest market success is leveraging its GPU product in CPU+GPU "accelerated processing units" (APUs), which have been scoring many laptop design wins.

The chipmaker is also gaining ground on rival Intel Corp. (INTC) in the server market.  While Intel's products do win on lightly threaded loads, AMD's latest Piledriver (Opteron 6400 series) cores beat out Intel's offerings in heavily threaded loads.  When you factor in AMD's cheaper prices, the company's server line is appearing very attractive to large clients; particularly those who actively run virtualized data centers or perform parallel computing.

AMD server
Despite losses, AMD is gaining ground in the server market. [Image Source: Reuters]

The world's most powerful computer is indeed powered by AMD's Opteron 6200 Series chips.

Source: Reuters



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RE: Contingency plans
By Samus on 11/14/2012 1:26:25 PM , Rating: 2
I agree, AMD isn't in trouble (not like RIM or Nokia) but its good to have a backup plan, or at least an appraisal of assets.

However, unfortunately their GPU business is not doing as well as it used too. If it weren't for contracts with game console manufactures their marketshare would be pretty abysmal compared to nVidia regarding discrete graphics. When Intel releases Haswell and really becomes serious about GPU performance, there will be virtually no low-end ($100) market for AMD, and this is the only place they are really competitive with nVidia (right now at least, who knows next year how things will be...)


RE: Contingency plans
By StealthX32 on 11/14/2012 1:39:25 PM , Rating: 2
I hate to say it, but they need more marketing support.

Their product is actually right up in line with the rest of the market, but everyone always wants Intel/NVIDIA. They need a new message, other than they're supposed to be the cheaper alternative.


RE: Contingency plans
By FITCamaro on 11/14/2012 1:52:57 PM , Rating: 1
How do you figure. The only area they're not in the lead in is the ultimate high end. Dollar for dollar their other GPUs match or beat Nvidias. My buddy just upgraded his system with a 7870 GHz Edition. Handling 1080p Guild Wars 2 at all maxed out settings just fine.


RE: Contingency plans
By DukeN on 11/14/2012 3:10:41 PM , Rating: 1
Thanks for the awesome insight! Just took out a mortgage and put that along with all my life savings into AMD stock.

PS: Your buddy wasn't exaggerating was he?


RE: Contingency plans
By FITCamaro on 11/14/2012 3:33:44 PM , Rating: 2
No I drove up to Charlotte and put it together myself.

He went from all low/medium settings to every setting maxed out.


RE: Contingency plans
By FITCamaro on 11/14/2012 3:35:12 PM , Rating: 2
And where the hell do I say go invest in them? I said that Nvidia is hardly stomping them in graphics cards.

He is right about both Nvidia and AMD going to have problems competing in the low end segment if Intel's new integrated GPUs are as good as they're promising.


RE: Contingency plans
By FITCamaro on 11/14/2012 3:35:41 PM , Rating: 3
Granted with their APUs, AMD is quickly killing that segment for itself as well.


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