AMD jumps above $2.50 on M&A rumor

• A Chinese media rumor that local CPU vendor BLX IC Design Co. is looking to acquire AMD (AMD +4.5%) has given a lift to the beaten-down chipmaker's shares. It doesn't hurt that 129.2M shares (20% of the float) were shorted as of Dec. 31.
• Thanks to low expectations, AMD rallied last week in spite of providing soft Q1 guidance to go with a slight Q4 EPS miss. Today's gains come as Intel sells off due to Seagate's light Q1 guidance.
• Update (3:08PM): Bernstein's Stacy Rasgon is skeptical about the rumor. Among other things, he notes Intel's x86 instruction set license to AMD "does not transfer under a change of control." AMD is now up 6.7%.