Even More ATI Woes for AMD

Advanced Micro Devices Inc.'s (AMD) 2006 acquisition of graphics chipmaker ATI Technologies Inc. has once again forced the processor maker to take a massive write-down. AMD on Friday disclosed that it would take an $880 million charge on the goodwill and intangible assets associated with its handheld and digital television units, both of which were acquired via the hugely overpriced, $5.4 billion purchase of ATI.

This comes on top of the $1.68 billion goodwill charge associated with the deal that AMD announced as part of its fourth-quarter earnings in January.

That adds up to $2.56 billion in charges against a deal that was considered AMD's big move against archrival Intel Corp. (INTC). That's a majority of the $3.2 billion in goodwill that was associated with the ATI deal. But that's not all. AMD also said it would in its first fiscal quarter, which ended June 28, record a $32 million restructuring charge, primarily for severance costs. It will also take a $24 million impairment charge against its investment in flash memory chipmaker Spansion Inc. (SPSN) and a $12 million charge against its auction-rate securities holdings.

AMD's ATI woes, coupled with botched product launches, have led some to consider the processor maker in bad enough shape to be a takeover target. But why hurry? If news like Friday's keeps coming from AMD, it'll just get cheaper and cheaper -- its shares slid 3% in morning trading Friday, to $4.60, a new 52-week low.

Comments

[KeepITReal:]

AMD is done for. Nobody will buy a business that is very capital inten$ive and the margins can't make up for it esp. with a mkt share of 13%, so... who would think AMD is a good takeover?? Building x86 cpus isn't rocket science nor a trade secret, so it's really a slow death for AMD.

2008 Jul 14 12:35 PM