Techweb: "AMD May Be Ready To Spin Off Vantis" techweb.com
For the third quarter, Vantis' sales sequentially declined 3 percent, to $50 million, because of weakness in the Japanese market. Vantis represented 7 percent of AMD's revenue for the quarter.
At 1.3-times sales, AMD as a whole is also considered undervalued, Randall said, while PLD-market leaders Altera and Xilinx are valued at five- to six-times sales. "I think Vantis is worth a lot more as a stand-alone company," Randall said.
Traditionally, the PLD business has grown faster than the overall semiconductor market, and suppliers have enjoyed gross-profit margins in the range of 60 percent. In 1998, however, severe price erosion flattened the PLD market.
In addition, AMD has made the microprocessor business the company's focus. Investing the necessary amount of R&D funding into both the microprocessor and PLD businesses is difficult enough; doing so during a period when AMD's cash needs are higher may make Vantis expendable, Peck said.
If they sold 49% of Vantis for 4x sales, they'd have proceeds of $400M. I'd go out and use this money to buy something with a better strategic fit, like S3 Inc., which has a market cap of $250M and sales about the same.
Petz |
