gross speculation

[Jonathan]

http://www.theinquirer.net/gb/inquirer/ ... m-mazingly

The IBM idea is one I've heard before. But the Nvidia one is new to me. And the Microsoft one is insane in the membrane.

[quantus]

IBM is possible, though I'm not sure they'd want to. Do they really need the extra fabs? They've got Charter as a partner already. I think AMD was a distant partner in that relationship, but didn't really stick with it too strongly. Really, I think it's possible that a large foundry will acquire AMD's manufacturing business to jump to the head of the class, then guarantee capacity or priority to AMD. Even though there's so much trouble with integrating design with manufacturability and there's movement to more closely tie the two together, there seems to be a larger movement towards horizontal integration in order to get rid of the HUGE costs of building a modern fab from the balance sheet and income statement which drives up the stock price. So, Charter might be an option since they're probably the most compatible with AMD. Really, I'm not sure how likely it will be for IBM to stay in the manufacturing business since it is SO expensive and they're shifting to services for the most part. Oh, I should add that the flash market has been a bit of a wild card that might be able to help AMD stay in the manufacturing game similar to Samsung.

There's pretty much no way that nVidia would really want to pick up AMD for the same reasons that AMD will likely divest itself of manufacturing.

MS gained a monopoly on the PC OS market when IBM gave up its own monopoly on the PC hardware business and sold OS rights to MS. As much as it would warm MS's monopolistic heart to return to those good old days, I don't foresee them wanting to pick up that sort of business and cause the market to revalue them with a lower P/E ratio. Intel is probably telling MS to go for it though so they can party all the way to the bank as MS flops with an Athlon ME or something while giving Intel a true monopoly. (Reason for ME flop?)

One final note I'd like to make is that if AMD is really that big of a takeover target, then why not speculatively invest in them in hopes of a nice bump up when the offer does come?

[Jonathan]

Is it axiomatic that a stock goes up when the company is bought out? Surely it could drop further before than happens, even if it does happen.

My take is someone with a lot of investments in fabs would want a nice high margin (well, relative to flash or dram) product to drop in them or Nvidia would want a processor so they can stay in the game (similar to the way AMD bought ATI in the first place). I agree IBM makes no sense as they already have plenty of processor designs to put in their fabs.

[quantus]

Is it axiomatic that a stock goes up when the company is bought out? Surely it could drop further before than happens, even if it does happen.

My take is someone with a lot of investments in fabs would want a nice high margin (well, relative to flash or dram) product to drop in them or Nvidia would want a processor so they can stay in the game (similar to the way AMD bought ATI in the first place). I agree IBM makes no sense as they already have plenty of processor designs to put in their fabs.

As long as you're getting into the stock just before the takeover bid is made, yes, you will make money because the company doing the takeover has to offer enough per share to convince enough shareholders to sell. Let's take the bid BEA got a bid from Oracle recently. The stock actually shot up over 18 even the though the bid was for 17 because people thought that Oracle should value BEA higher. If you're looking for a longer term investment, then yes, you're right, the stock could go down much much more before the bid ever happens. The market's already taken into account the losses AMD is taking, so a bid would still likely be higher because a company that can use AMD would value it more than you or I as a shareholder who just have to sit and watch and hope.

I don't think nVidia would want the headache of the fabs. nVidia would either quickly spin the fabs off or sell them or just wait for AMD to go fabless first. The first two options would probably allow nVidia to make a higher bid than normal since it would probably have a buyer lined up to help with the financing of the takeover.

[Jonathan]

nVidia would either quickly spin the fabs off or sell them or just wait for AMD to go fabless first.

I'm with you.

[quantus]

On further thinking, I'm not sure that nVidia could wait until AMD goes fabless since they're at a discount now because of the manufacturing. Once they go fabless, they'd be much stronger fiscally and probably too strong for nVidia to snap up. Maybe nVidia really will line up a buyer for the fabs and make a play now.

[Jason]

I have no knowledge of this market space, but if Nvidia buys AMD, wouldn't that create a monopoly for them?

[Jonathan]

http://www.informationweek.com/news/sho ... =201807469 - Intel high end graphics
http://www.theinquirer.net/en/inquirer/ ... n-detailed - Intel low end graphics
http://www.geek.com/first-amdati-fusion ... d-in-2008/ - AMD low end graphics


If Nvidia does nothing:
On-die graphics replace integrated motherboard graphics for both AMD and Intel. I think a large chunk of game developers takes a look at that market and says, "You know, I could make some money there," and starts writing games to that platform.
Off-die graphics have three players. Historically, in this situation the market has produced just two winners. Granted, Nvidia has been executing well lately. And maybe the TAM will be significantly higher for GPGPU designs. And maybe Nvidia is content.

[Jonathan]

http://www.theinquirer.net/gb/inquirer/ ... -christmas

Of course, a total defeat is highly unlikely, and after all, rumor has it that an old South Korean man named Samsung is interested in having a Chimp pet.

This is what I was referring to in my post above. Samsung needs a high margin product in their portfolio. AMD has one and a design team to crank out more. You do the math.