AMD, Broadcom Finish Digital TV Sale at Lower Price
Advanced Micro Devices has completed selling its underperforming digital television business to Broadcom. However, AMD and Broadcom announced that the two companies had renegotiated part of the deal, and AMD will now sell the division at a cost of $141 million instead of the original price of $192 million. The sale will help AMD better compete against Intel and allow the chip maker to concentrate more on the design and marketing of its processors and graphics chips.Advanced Micro Devices has completed the sale of its Digital Television business to Broadcom, although further losses from that division forced AMD to settle for a lower price for the business.
On Oct. 28, AMD and Broadcom announced that the two companies had completed the sale. When the agreement was first announced in August, the two companies agreed to a price of $192.8 million. When the final deal was signed Oct. 28, the sale price dropped to $141.5 million.
An AMD spokesman wrote in an e-mail that further losses from the DTV business meant that both companies decided to reexamine the deal and both AMD and Broadcom agreed to a lower price.
"AMD and Broadcom negotiated a deal for the DTV business based on certain assumptions about the fair market value of the business assets with the definitive asset purchase agreement," Drew Prairie, AMD spokesman, wrote in an e-mail to eWEEK.
"As a result of further review, the two companies have renegotiated the value of the overall DTV business as it became apparent that certain of these underlying assumptions had changed, and as a result, fourth quarter DTV revenue will be lower than previously expected," Prairie added.
Earlier this month, AMD announced a third-quarter loss of $67 million, or 11 cents per diluted share. The company's net revenue stood at $1.78 billion.
The sale of its DTV division will allow AMD to concentrate on its core microprocessor and graphics businesses as it looks to better compete against Intel. AMD has also looked to cut costs, and the company announced earlier this month that it would spin off its processor manufacturing division into a new company. When AMD bought ATI in 2006 for $5.6 billion, it inherited the graphic maker's consumer electronics division, which has underperformed for AMD since it completed the deal. The DTV business was part of the consumer electronics division along with a handset business. AMD is still looking for a buyer for the handset division.