AMD weighing a business break-up or spin-off

AMD logoUpdated June 21, 1720 EST (2220 BST): AMD Spokesperson Sarah Youngbauer issued a statement over the weekend denying Reuters' report. She wrote, "AMD provided official confirmation that we have not hired an outside agency to explore spinning-off/splitting the company... We remain committed to the long-term strategy we laid out for the company in May at our Financial Analyst Day, which encompasses all parts of the business."

Original story

On Friday afternoon, Reuters reported that AMD is weighing its options, and those options include breaking the company up or spinning off some sectors into independent companies. Three anonymous sources who are “familiar with the matter" told the newswire that AMD is just looking at a break up preliminarily, noting that the company hasn’t made any decisions to go forward with the move.

Reuters' sources had said that AMD has hired a consulting firm, "to help it review its options and draw up scenarios on how a break-up or spin-off would work." AMD has struggled over the last decade to keep up with its hulking competitor, Intel. The company’s most recent quarterly financial results in April were down 26 percent year on year, with revenue of $1.03 billion and increased operating losses. In addition, the company announced that it would be leaving the microserver market, essentially scrapping its 2012 acquisition of SeaMicro. Since stepping into the role, AMD’s new CEO Lisa Su has been determined "to consider every possible option to turn the company around,” according to Reuters, including breaking up the company.

"One option under consideration is separating AMD's graphics and licensing business from its server business, which sells processors that power data centers,” an anonymous source said, while adding that nothing has been decided and the company could remain together after all.

A spinoff wouldn’t be a first for AMD. In 2009, the company spun off its semiconductor fabrication plants to create GlobalFoundries. In 2012, AMD shed its remaining 34.2 percent share in GlobalFoundries in order to give the company more flexibility in choosing its semiconductor manufacturers. At the time, AMD said the deal would cost it $703 million.

Source: Ars Technica

Tags: AMD

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