So who is thought to be acquiring AMD now?
Ford Motor Co.?
Nope, this week it's Microsoft's turn to be the buyer du jour. The logic behind the rumor is that Microsoft is concerned about the fiscal health of the supplier of its Xbox One SoC and wants to make sure no other nefarious buyers snap up the company.
It's not a bad idea, because Microsoft does have a chip development business and if it fears for AMD's ongoing survival, it would want to throw it a lifeline to keep its Xbox SoC provider alive. But given the write-off the company has taken in Surface tablets and will take for Nokia, I doubt Satya Nadella wants to buy another hardware company right now.
If AMD really needed a lifeline, he could throw it some money ala Apple in 1997 without having to buy the firm outright. Plus, Sony also gets its chips from AMD and Japanese company or not, it would raise all hell over its main rival owning the supplier of its SoC.
If you haven't noticed the trend, a lot of these rumors about someone buying AMD seem to start or catch fire in the investment media. Not to name names, but many of the financial publications have either been the origins of these rumors or really ran with the story. In this case, although the hobbyist site KitGuru is the source of the Microsoft rumor, and it's not known for breaking these kinds of stories.
With so many financial sites getting into reporting, we're starting to see wishful thinking appearing as news. At least with Seeking Alpha the author will disclose their stake, if they have one, in a company they cover.
Some of you may call me out since I covered so many of these rumors, and that's fair. It took a little while to realize the pattern that was emerging. Now it's starting to become clear to me that there are people who really, really want AMD to get bought out and at a high valuation.
AMD's stock is down more than half from its two-year high of $4.50. It shouldn't be a surprise that investors want to get that stock going. More and more investor issues are being played out in the press, like the recent push for Qualcomm to split its business. These are things that should not worked out in the open. At least Altera's investors had the sense to push the company back to the table with Intel quietly and behind the scenes after talks initially fell apart.
So when you read these stories, consider three things: one, the source. If it's in the financial press, question their motives. Two, the smell test. One recent ridiculous rumor about AMD was that it was considering divesting a part of itself. That makes absolutely no sense. It can't sell the x86 business and the graphics business is now thoroughly woven into the business and the technology is a part of the x86 product. The server business has virtually no value. Opteron has single-digit market share. They tried to sell off the SeaMicro business and couldn't find a buyer and simply buried it.
Finally, always remember, the most valuable part of AMD is the x86 architecture, and that's tied to a license agreement with Intel. Intel would have to approve of any acquisition of AMD. Never mind the DoJ, Intel will likely shut down any potential acquisition by any company that is even remotely a competitor. That's why the rumored Chinese acquirer never made sense, Xilinx, though intriguing, won't happen, and Qualcomm is never going to get AMD.
Intel and Microsoft once formed the mighty Wintel alliance but that relationship has cooled in recent years and it's unlikely Intel would want Microsoft as a competitor.
And I still believe that CEO Lisa Su does not want to sell off the company if she can avoid it. AMD has a hot new microarchitecture, called Zen, in the works for release next year and it's already generating excitement based on a few leaks. For now it's a hang on game for AMD and I think they want compete on their own.