AhYap’s Blog

Advanced Micro Devices, the No. 2 supplier of computer processors, is close to a deal to buy graphics chip maker ATI for $5.5 billion, a source familiar with the situation said on Friday.Any such deal would shake up the processor industry, which is witnessing a battle over market share between AMD and larger rival Intel.

ATI is one of two major graphics chips makers, along with rival Nvidia, and is a big supplier of chipsets - the cluster of secondary chips and interfaces that surround a computer’s processor - to both AMD and Intel. Unless talks break down, a deal could be announced as early as Monday, the source said.

ATI declined to comment, and an AMD spokesman could not be immediately reached for comment.Shares of ATI rallied on Friday on renewed speculation that a deal was close at hand.Rumors that AMD could purchase the Canadian graphics chip maker surfaced in late May when an analyst suggested the move could make AMD more competitive with Intel. The speculation sent ATI shares surging about 10 percent.

Some analysts have questioned the rationale for an AMD-ATI merger, and others were surprised that the speculation received no attention from analysts during AMD’s earnings conference call on Thursday.

AhYap’s Comment:
No wonder AMD stock fall like shit for the last few weeks. I traded 4 call options last month. 3 made money and 1 lose money. Guess which is the one that lose money!!! It’s not that AMD or ATI is a bad company. But the ‘pattern’ was that if COMPANY A acquire COMPANY B, COMPANY A stock price will fall while COMPANY B stock price will rise. For example, when Bumiputera Commerce want to acquire Southern Bank, Bumiputera Commerce stock price will fall wall Southern Bank stock price will rise. That’s how people response to stock market. It’s all human phychology and nothing related to the ‘fundamental’ aspect.