AMD Officials Deny the Company Is Up for Sale

Despite the difficult environment and media reports, AMD officials say they have no intention of selling the company or any of its assets.

Advanced Micro Devices officials are saying that neither the company nor any of their assets are for sale, despite a report that the chip maker has hired JP Morgan Chase to work out options for the company, including a possible sale.

Quoting unnamed sources, Reuters reported Nov. 13 that an outright sale was not at the top of the list of options, which also could include AMD selling its patent portfolio.

In a statement given to media outlets, an AMD spokesman said officials and members of the company's board of directors are confident in the long-term road map laid out by executives.

"AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly differentiated technology assets is the right approach to enhance shareholder value," the statement said.

At least one analyst also doesn't believe AMD will be sold, or will sell off any of its assets. In a research note Nov. 14, Vijay Rakesh, an analyst with Sterne Agee, said that after a meeting with AMD senior management—including Lisa Su, senior vice president and general manager of AMD's global business units—he believes that the company is not facing liquidity issues, and that a potential wafer-supply agreement with chip foundry Globalfoundries, expected by the end of the year, will give AMD more financial relief.

Rakesh also was encouraged by AMD officials' assessment that they could ramp their semi-custom embedded chip business to become 20 percent of the company's revenue mix by the end of 2013—up from 5 percent now—which would reduce AMD's reliance on the struggling PC market.

"We do not believe there would be any AMD breakup or sale in parts as AMD considers its IP core to the business," he wrote in the report.

The speculation about AMD's future comes at a time of transition for the chip maker. Like larger rival Intel and systems OEMs like Hewlett-Packard and Dell, AMD has been hit hard by the declining sales of PCs. The growing popularity of smartphones and tablets and the struggling global economy have conspired to slow PC sales, though vendors are hoping to get a boost from last month's release of Microsoft's new Windows 8 operating system.

CEO Rory Read, who took over the company just over a year ago, said during a conference call with analysts and journalists last month that the PC chip business currently accounts for about 85 percent of AMD's revenue. Read's goal is to reduce that to 40 to 50 percent, with AMD focusing on other areas—the embedded-device space (such as gaming, industrial and communications applications), dense servers for such environments as cloud computing, and ultra-portable computing devices such as ultrathins, tablets and entry-level notebooks.

AMD also is looking to integrate third-party chip technology into its product portfolio, announcing late last month that it will begin making 64-bit ARM server chips, marrying the low-power chip designs with the interconnect fabric it inherited when it bought microserver maker SeaMicro in February. The ARM chips will be for dense servers running in hyperscale data center environments.

However, while AMD officials have outlined their road maps for growth, they also have been cutting expenses. The vendor last year cut about 10 percent of its workforce, and in October announced another 15 percent cut, or about 1,770 jobs.

Sterne Agee's Rakesh also said there are a number of ways AMD could improve its financial situation, such as selling or leasing its Santa Clara, Calif., facility (about $150 million in savings), getting access to about $500 million in secured loans, and monetizing its portfolio of about 6,000 patents and patent applications, which would amount to about $2.2 billion.