AMD Writes Down ATI...Again

A year ago - and last summer - AMD wrote down the value of its over $5 billion acquisition of ATI. Now, AMD is doing it again.

Back in 2006, heads turned when chipmaker Advanced Micro Devices plunked down about $5.4 billion to acquire graphics developer ATI…but things haven't quite worked out like AMD planned. A year ago, AMD was forced to write down some $1.7 billion of the "goodwill" value of ATI—essentially, admit it overpaid for the business—and back in July AMD wrote off another $880 million, citing ATI's underperforming mobile graphics and digital television technologies…which it sold to Broadcom in August for just under $193 million. All told, AMD had eaten about half the $5.4 billion it had sunk into the graphics developer…and now, in a new filing with the Securities and Exchange Commission, the company admits it will have to write down the value of ATI by an unspecified amount that will have a "material" impact on the company's financials.

AMD cites the long-term financial outlook for the company, given the current global economic climate, as one reason for the write-down, along with AMD's own decline in stock price and reduced market capitalization. The company says it will not have to spend any money as a result of these "goodwill impairments," but has also announced the layoffs of some 600 employes, 100 more than it announced it would cut loose last month. Those job cuts come after AMD cut 10 percent of its workforce earlier this year, eliminating some 1,600 positions.

AMD shed its CEO Hector Ruiz and other top execs earlier this year, and has recently entered a $6 billion manufacturing partnership with Abu Dhabi investors to create the Foundry Company, which will essentially convert AMD into a fabless chip designer.

AMD Opteron 45nm Boosts Performance and Uses Less Energy

AMD Opteron is now available in 45-nanometer technology. It is the latest move by Advanced Micro Devices to compete with rival Intel. Intel currently has 80 percent of the global market for microprocessors.

Advanced Micro Devices Inc is shipping its next generation of AMD Opteron chips ahead of schedule. The new AMD processor offers faster performance with 35 percent less power consumption.

AMD Opteron is a quad core processor which are used in servers. The company shipped the new processor months ahead of schedule to compete with Rival intel corp. Intel currently has 80 percent of the global market for microprocessors.

The new AMD Opteron is also code-named "Shanghai" which was first unveiled last year. The quad core is the first 45-nanometer chip made by the company. Each core operates independently on the chip. The chip is also smaller in size than the previous generation of processors.

The new processor is energy efficient which can automatically turn off non-working parts which are not in use. Overall, the new chip uses 35 percent less energy.

There are two versions of the AMD Opteron chip available. The second processor is a more enhanced version which will be available in early January. IBM, Hewlett-Packard, Sun Microsystems and Dell are among 25 systems vendors who will be shipping servers this quarter with the new Opteron chip installed.

AMD to own less of chipmaking spinoff

Advanced Micro Devices will reduce its stake in the manufacturing operations it spun off in October, as it adjusts to repercussions of the financial crisis.

This follows a fourth-quarter warning earlier this month when the chipmaker revised its revenue estimate downward.

And like the shares of many companies, AMD's stock price has been in a free fall. Dropping from over $7 back in June to $2.10 on Monday.

Monday's action revolves around Abu Dhabi-based Mubadala Development and the Advanced Technology Investment Company (ATIC)--which Mubadala backs.

ATIC has equal voting rights with AMD in the newly formed manufacturing concern, the Foundry Company, and--per the October agreement--had owned 55.6 percent of the new entity.

However, as a result of amendments between AMD and ATIC, AMD will own approximately 34.2 percent and ATIC will own approximately 65.8 percent of the Foundry Company's fully converted common stock, AMD said Monday.

"Changing economic times" is the reason for a change in the terms, an AMD representative said.

Other changes include a restructured agreement that now says Mubadala will purchase 58 million shares of AMD's common stock "at a revised purchase price per share equal to the lower of (i) the average closing price per share of AMD's common stock on the NYSE during the 20 trading days immediately prior to and including December 12, 2008 or (ii) the average closing price per share of AMD's common stock on the NYSE during the 20 trading days immediately prior to the closing date of the transaction."

AMD will also issue to Mubadala an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.

"All other material economic terms of the transaction agreements remain unchanged. ATIC will still invest $2.1 billion to purchase its stake in the Foundry Company, of which it will invest $1.4 billion directly in the new entity and will pay $700 million to AMD," the chipmaker said in a statement.

AMD plots earlier Phenom II support for DDR3 memory

Advanced Micro Devices could bring DDR3 memory support to Phenom II desktops earlier than it had projected, the company said on Monday.

The company aims to add DDR3 support to Phenom II by the middle of 2009, but could push that up depending on factors including pricing of the memory, said John Taylor, an AMD spokesman.

To support DDR3 memory, the company will introduce the AM3 socket, Taylor said. Motherboards with the AM3 socket will support AMD's upcoming Phenom II CPU.

AM3's launch could be as early as "a few" months after the release of the Phenom II processor, which is scheduled for launch in January.

AMD plans to transition to DDR3 memory support for servers with the Maranello platform in 2010. The Maranello platform includes the six-core Sao Paulo and 12-core Magny-Cours chips.

DDR3 is a new form of memory that offers larger bandwidth for quicker data transfers in PCs than DDR2 memory. As processors get faster, DDR3 provides faster communication between the CPU and the memory that could boost system performance, said Nathan Brookwood, principal analyst at Insight 64. DDR3 memory will boost performance of the already-speedy Phenom II-based machines, he said. However, DDR3 memory is expensive as it's relatively new, he noted.

AMD has overclocked the Phenom II processor to run at up to 4GHz on air-cooled systems, and up to 5GHz on liquid-nitrogen cooling, Taylor said. The first Phenom II chips will be quad-core processors and will include 8M bytes of cache, according to the company's chip road map. AMD declined to provide pricing information for Phenom II.

Intel's Core i7 processor for gaming systems, launched last week, already supports DDR3 memory.