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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 217.53+1.5%Nov 28 9:30 AM EST
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To: Paul Engel who wrote (60755)10/29/2001 11:50:54 AM
From: dale_laroyRead Replies (1) of 275872
 
>but it sure would be SWEET for AMD to buy SGI - like, what's better than two losing companies combining into one BIGGER losing company?<

How about three or four losing companies combining into one bigger winning company.

The benefits of a merger between SGI and AMD are:

1) SGI increases the probability of surviving long enough to benefit from Itanium.

2) SGI can hedge their bets by becoming the premier vendor of Sledgehammer based workstations/enterprise systems.

3) AMD can increase SGI's prospects of profitability by steering them into the high end gaming systems market currently serviced by the likes of Alienware and Voodoo, by releasing Silicon Graphics branded P4 based high end gaming machines. This could force the current companies to focus on Athlon based systems to compete.

4) AMD can steer SGI towards becoming more of a software company through release of Irix/SGI Linux for IA32/x86-64 into the merchant market.

The benefits for AMD are:

1) Insuring the port of a world class OS and its tools to x86-64.

2) Insurance that name brand x86-64 based workstations/enterprise systems become available as early as possible.

3) Access to SGI's technology, including the high speed interconnect technology they got from Cray Research.

4) The ability to utilize SGI's expertise in producing support chipsets for various processors.

5) The ability to hedge bets through utilization of Intel's success. This would be especially true if SGI has the rights to produce PIII and/or P4 and/or Itanium support chipsets. Fab25 could be put to more profitable use producing P4 and/or Itanium support chipsets than producing Flash.

Adding eMachines into the mix, AMD/SGI would gain:

1) Immediate access to retail channels.

2) Immediate access to technical support (albeit poor technical support, but this situation could be improved with better training and management).

3) The ability to convert the entire eMachines product line over to Duron/Athlon.

4) Immediate access to volume manufacturing operations.

Adding a graphics engine, such as Kyro, into the mix AMD gains:

1) The short term ability to produce GPUs at Fab25.

2) The long term ability to produce better integrated chipsets, possibly even for PIII and/or P4 if indeed SGI has a license to produce PIII and/or P4 support chipsets.
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