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Thursday, January 24, 2008
 IBM Takeover of AMD Speculations Arise
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Message Text: Speculations that microchip maker AMD might be bought by IBM surfaced the last couple of days, rising AMD's stock shares by 8% yesterday.

Neither parties have commented on the rumour, which however proved to be enough to offer AMD's share a a significant boost. At the same time, IBM's stock was down yesterday by 1.7 percent on the New York Stock Exchange.

Some analysts have predicted that with AMD shares being so low, it might be a good time for IBM to acquire them. IBM has had a research and development expense-sharing agreement with AMD. AMD might want to use IBM's East Fishkill, New York, chip-fabrication plant to build microprocessors, in an effort to stengthen its position against rival Intel, who currently has 12 chipmaking plants across the globe, compared to AMD's single chip fabrication plant in Germany.

On the other hand, IBM's recent policy to move away from hardware and manufacturing and moving to software and solutions, make the acquisition a low-probability event. IBM sold its computer hard disk business to Hitachi in 2002 and its PC business to China's Lenovo Group in 2005. Last year, IBM sold its printer business to Japan's Ricoh. Earlier Wednesday, IBM said it was buying privately held AptSoft Corp to expand its business event processing software portfolio.

Mergermarket.com, a mergers-focused news service, reported on the Financial Times' Web site that IBM and AMD could strengthen their current partnership.

"A deal could see IBM's microelectronics division merge with AMD at some point, possibly in the near term," mergermarket.com correspondent David Zielenziger wrote, citing "industry sources."
 
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