Finally some +ve news for this dog:
uesday April 7, 1:29 pm Eastern Time
IBM does not need to invest in AMD-analyst
SAN FRANCISCO, April 7 (Reuters) - International Business Machines Corp. does not need to invest in Advanced
Micro Devices Inc. (AMD - news) and should not make an investment in the chip maker, BancAmerica Robertson
Stephens analyst Bret Rekas said.
''IBM doesn't need AMD. AMD doesn't offer IBM anything,'' Rekas said. ''Will IBM do it? They can; I don't think they
necessarily should.''
Rekas's comments, in which he reiterated a market perform rating on IBM, come amid a slew of rumors in the past week
that the computer giant would invest in a stake in AMD, the cash-strapped maker of Intel Corp. (INTC - news) clone
chips.
The two companies have declined to comment on the rumors, which started last week, after some analysts said that IBM
may acquire an estimated 25 percent stake in AMD, based in Sunnyvale, Calif. IBM already has signed a pact to
manufacture processors for AMD, which has been having problems in getting its K6 chips to volume production.
AMD, which will release its first quarter earnings after the stock market closes Tuesday, is expected to update Wall Street
on its manufacturing status. Analysts have also said in the past week that AMD's yield problems have been solved and that
it is now producing its K6 processors at higher speeds in volume.
Monday, Ashok Kumar, an analyst at Piper Jaffray, said that he believes IBM will make an investment in AMD, bailing the
company out of its current cash crunch in the form of a ''Medici,'' referring to the Italian banker of the Renaissance.
''I get the sense that this is not going to happen, but then what constitutes an investment?'' said Rekas, adding that IBM
could announce some sort of manufacturing exchange.
''IBM says, hey, we will give you X in exchange for a deal -- for every million chips we produce for you, we will get one
million chips,'' Rekas cited as an example.
IBM has been using AMD's K6 chip in some of its sub-$1,000 PCs. That market sector is fast-growing but much less
profitable than higher-priced PCs.
''We believe IBM isn't interested in trying to challenge Intel's de-facto PC microprocessor monopoly,'' Rekas said. ''That
war has been waged and won by Intel...Although IBM has used limited volumes of alternative X86 processors in its
consumer-oriented Aptiva line, the majority of IBM PC Company's shipments have and, by our analysis, will, continue to
utilize Intel microprocessors.''
Shares of AMD were down 1-7/16 to 29. IBM was down 1-7/16 to 104-09/16. |
