Rumors of Advanced Micro Split-Up Resurface

Advanced Micro Devices (AMD) shares are climbing on little actual news, apparently getting a lift from revised rumors that the company might split into two parts, according to the blog 24/7 Wall Street.

The notion of splitting AMD into two parts cropped up a month ago in a story from the U.K. tech site The Inquirer.

Meanwhile, JMP Securities analyst Krishna Shankar today wrote a research note repeating his Market Outperform rating and $10 price target. Shankar asserts that both Hewlett-Packard (HPQ) and Sun Microsystems (JAVA) are ramping servers based on AMD’s quad-core Barcelona processors. He also says the company is on track to ratchet up the speed of its Barcelona chips late in the second quarter.

Shankar also today ran a sum-of-the-parts analysis on AMD, and came up with a potential valuation of $13 a share. To get there, he assumed enterprise value/sales multiples of 1.5x for the processor and chipset business, 1.5x for graphics, 1x for non-core consumer electronics components and 1x for embedded computing and boards. He also says the company is making progress on its long-awaited Asset Lite strategy; he says the company could raise $1.5 billion to $2 billion through a strategic equity stake or partial asset sale involving its Dresden fab.