Monday, July 24, 2006

Let’s go shopping for ATI!

Well, it's a little late for that. Today, AMD (Advanced Micro Devices, Inc.) announced its intent to pay $5.4 billion for graphics chipmaker ATI Technologies in a move to increase AMD's mobile-computing and consumer electronics capabilities.

(Check out AMD CEO Hector Ruiz' grin as he shakes hands with ATI CEO Dave Orton. Ruiz is on the left.)

This deal is expected to put a major squeeze on Intel, AMD’s major competitor. Terms include $4.2 billion in cash, and AMD will issue 57 million shares of common stock to ATI shareholders. Ruiz said during a news conference earlier today, “this strategy has been in the making for a number of years and culminated with the ATI acquisition." He also noted that "visual computing is playing a larger role in what we are doing, going forward."

Only time will tell if AMD will actually get the full value out of this transaction.

Dave Orton will join AMD as an executive vice president of the ATI business division, reporting to the AMD office of the CEO, comprising Hector Ruiz and president and COO Dirk Meyer.

After the announcement AMD's shares were down 4.8 percent to $17.37 a share in midday trading today. The deal is expected to close in the fourth quarter and will result in annual sales of $7.3 billion and a workforce of a whopping 15,000 people.

Do you think this will result in a reduction of force for AMD?


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