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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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Contingency plans
By geddarkstorm on 11/14/2012 1:19:18 PM , Rating: 3
Piledriver has actually done pretty well; beating Intel's CPUs on some tasks that are multithread sensitive, instead of being completely trounced like previously. AMD is definitely on a comeback so far.

If there were talks with a bank, it'd be for risk management, I would think. Just in case piledrive did not catch on or take off. But AMD's eggs aren't all in one basket. Got that ARM offshoot growing as the article points out, and there's always the very strong GPU business.

I don't think AMD is going any where bad any time soon, unless there's something really dark behind the curtain we have yet to see.




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.


RE: Contingency plans
By Jeremy87 on 11/14/2012 3:35:43 PM , Rating: 3
On the technical side, AMD's chips are bigger and more power hungry at the same performance, no matter how you measure it.

The only thing they are actually beating Intel on is the willingness to sell their chips for less profit, which effectively makes them perform better per dollar. Sometimes.


RE: Contingency plans
By FITCamaro on 11/15/2012 7:21:39 AM , Rating: 2
While power consumption matters for server level environments, in the home, you're talking a difference of a few dollars a year between an Intel chip and an AMD chip.

But lower prices was why I told my buddy to get a FX-6200 vs an Intel chip. Processor cost was lower and motherboard cost was lower.


What AMD needs to do
By Ammohunt on 11/14/2012 2:02:35 PM , Rating: 2
They need to differentiate themselves from others in the market; this performance war stuff is not gaining anything. Brand loyalty in CPU's exists only in the power user market most consumers can give a rats ass what cpu is powering their device as long as it runs the software they want it to run. You can't tell me their isn't something in the old DEC Alpha patent portfolio they obtained from Compaq that could drive the market in a new direction they have the better threading why not build VM specific CPU architectures saturating it with cloud marketing mumbo jumbo. Say a 20+ core lower power cpu that is more powerful than ARM but consumes slightly more power,is x86 compatible and massively parallel in processing. Once they get a product then could partner with a large Cloud vendor like Amazon or VMWare to do branding with the making AMD synonymous with the Cloud moniker.




RE: What AMD needs to do
By lyeoh on 11/14/2012 2:55:05 PM , Rating: 2
Maybe they should sit down with the OS and compiler people and figure out something more interesting to do with all those transistors.

There are plenty of things in the x86 world that are crappier than they could be. For instance handling of time (real and monotonic) is crappier and more complicated than it has to be.
http://www.integrationsystemsinc.com/News/tabid/10...
http://lists.freebsd.org/pipermail/freebsd-arch/20...
Programmers often want a way to have something happen on a specific time, and also another way to have something happen after a specific period. They might want the latter to occur correctly even if the system time is changed. Yes this is an OS problem, but the hardware could help a lot. And often just a single timer isn't good enough.

Then there's the serialization/synchronization/locking problem, say you want to do that sort of stuff across CPUs or even clusters, and have it happen as efficiently as possible.

There should also be ways for hardware to make this sort of stuff easier too: http://www.kegel.com/c10k.html


RE: What AMD needs to do
By FITCamaro on 11/14/2012 2:57:05 PM , Rating: 2
Did I seriously just see the name Compaq thrown out there? Damn its been a while.


RE: What AMD needs to do
By someguy123 on 11/14/2012 10:28:17 PM , Rating: 3
Their bulldozer module chips are pretty much what you're talking about. Running multiple VMs is one of the few uses of bull/piledriver chips. They don't have anything even close to the performance/watt of ARM cpus, hence licensing ARM.

Brand loyalty not existing outside of power users is one of the reasons why intel dominates the GPU market in total share. their CPUs are great but their integrated GPUs have been horrible until sandybridge, but people don't really care about what goes into their facebook computer.


As usual...
By Beenthere on 11/14/2012 10:30:35 PM , Rating: 2
...Reuter's is WRONG as were the sensationalistic claims that AMD was eliminating 30% of it's work force - which it did NOT do.

Expect a lot of FUD from those who are clueless or with something to gain from reporting falsely "rumors".

Another day, another B.S. story from the clueless media.




RE: As usual...
By Dribble on 11/15/2012 4:20:21 AM , Rating: 2
They got rid of 15% of the workforce which is still a huge cutback, if not quite as big - so they were right but sensationalised. Reuters is probably wrong in selling the whole company, but right in that they are going to sell something - they need cash.

Will it be patents, ati, who knows, but it's gonna be something? You don't bring in JP Morgan for no reason.


RE: As usual...
By phazers on 11/16/2012 2:23:27 PM , Rating: 2
quote:
sensationalistic claims that AMD was eliminating 30% of it's work force - which it did NOT do


Saw a report recently that AMD's revenues are down by $1.072 billion from 2 years ago. They are in a cash crunch right now and will either need to float another senior note or sell some assets.

I would not be surprised to see another 15% layoff round in the near future, which would mean a total of 30% in 6 months..


Excuse to prop up the stock price ?.
By fteoath64 on 11/15/2012 2:40:44 AM , Rating: 2
This cannot happen becuase AMD's licensing agreement with Intel will need Intel to approve of the "buyer". Or else that agreement will be null and void. WHich would mean a split or loss to the x86 licenses.

Look like AMD is caught between a rock and a hard place.




By silverblue on 11/16/2012 6:27:22 AM , Rating: 2
Intel relies on the deal for their x86-64 license which would be invalid if nullified, meaning AMD could cream them for making even a single non-Itanium CPU. So, the deal itself cannot end unless Intel really wants to commit commercial suicide. Not wise when ARM is really gaining traction. The courts are hardly likely to force AMD to license x86-64 with nothing in return.

Intel may even change its mind and allow a transferance of the licence through a buyout so as to keep a competitor in the market place and to avoid being potentially split up. AMD being owned by Samsung would be a huge deal but arguably the lesser of two evils.

My opinion, probably wrong, but whatever.


Prediction
By christojojo on 11/14/2012 5:58:35 PM , Rating: 2
Sony will buy AMD promise to use the procs in its next PlayStation iteration then at the last minute use a competitors costing themselves billions. just kidding

Seriously who is out there that can afford them and know how to run them?

Samsung?
Foxconn?
Intel?
Even if weren't supposed to know about this "sale", the list is too small for them not to know and subsequently the "creditors".




amd
By DailyKenny on 11/15/2012 9:31:17 PM , Rating: 2
How about going 128 bit?




According to SemiAccurate...
By phazers on 11/19/2012 10:56:53 AM , Rating: 2
The rumour du jour is that AMD is canceling Kaveri, Steamroller and Excavator:

http://semiaccurate.com/2012/11/19/amd-kills-off-b...




AMD would be nuts to dump x86
By maugrimtr on 11/15/2012 8:43:25 AM , Rating: 1
quote:
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.


This article is dumb on so many levels. If anyone on staff bothered to research articles, instead of reposting them ad-hoc from other sources, they'd know that "monolithic" x86 cores outperform ARM cores by far. When you need something done fast, only an x86 CPU is worth using unless you can avail of GPU compute efficiencies.

ARM cores excel at something else - servers which must handle lots of processes which don't individually need a lot of processing power (or energy). Web servers are a perfect example. An ARM server with a 100+ cores can handle 100 parallel requests without needing to queue them. This instantly reduces latency compared to having a modern x86 with minimal cores that relies on speed to spit the same 100 requests, sequentially, down the pipe.

ARM will never supplant x86 unless it reaches the level of outperforming x86 in mainstream applications so why in God's name would AMD commit suicide by dumping x86 altogether? It's far better that they grab for ARM Server market share while Intel ignore that market entirely. It's a huge potential market - the entire web runs on x86 but ARM cores are getting more attention for being power efficient and more suitable for cloud deployments.




Trinity > i3/i5
By edge929 on 11/14/12, Rating: 0
"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg














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