Does AMD make a great acquisition?

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computer chip

close-up photo of computer circuit board

The shares of Advanced Micro Devices (NASDAQ:AMD)  popped up 4.69% recently to two dollars and fifty-seven cents. The reason? Takeover rumors. According to a Chinese-language website, International Online, the Chinese hardware technology company, BLX is looking into buying the long-standing American semi-conductor brand. AMD hasn’t been doing all that well recently. In its past quarterly results, it reported that its earnings broke even. This disappointed analysts that have estimated that the company would make at least a penny a share.

Overall, its earnings clocked in at 1.24 billion dollars for the past quarter. This indicates a 22% decline on a year over year basis. As sad as this figure is, it is in line with the consensus estimates of analysts. AMD’s chip business is in transition. As consumers focus more on mobile devices like smartphones and tablets, the PC market has been going through some painful changes. Since AMD is still solidly a PC player, it is not a surprise that its stock has been suffering due to this consumer sea change.
Its enterprise sales have been dropping along with computer CPU and graphical chips. In fact, these products are down 25% during the past quarter on a year over year basis. All told, these anemic figures make Advanced Micro Devices a lucrative takeover target. However, whoever wants to buy the company should be positioned to leverage the key strengths of AMD.
What does AMD bring to the table that might be of value to a Chinese or global buyer. First, AMD is a solid brand when it comes to graphics chips. A lot of AMD chips power graphics on laptops and desktops. Also, AMD has a solid design team. Finally, AMD has an established sales network in the United States and beyond along with key relationships. Put all together, a takeover of AMD might make a lot of sense if the buyer has a solid game plan in quickly building on AMD’s strengths while reducing its costs and introducing a higher degree of product positioning flexibility. AMD’s misfortunes can definitely mean a great opportunity for the right player.

Jacob Maslow is our Editor, and has extensive experience with writing about global financial matters. He also runs a successful SEO consulting business, Mekomi Marketing