In article <479e7293$0$24837$6c5eefc5@[EMAIL PROTECTED]
>,
nobody@[EMAIL PROTECTED]
says...
> Yousuf Khan wrote:
> > nobody@[EMAIL PROTECTED]
wrote:
> >>> IBM only wants software businesses these days.
> >>>
> >>> Yousuf Khan
> >>
> >> Why, then, they got a new fab in East Fishkill? Just to show
everyone
> >> they have balls? (As per fmr. AMD CEO Sanders, "real men got fabs".)
> >> ;-)
> >> If AMD's free fal continues to the point when market cap gets well
> >> below their book value, a buyer might emerge. Not necessarily IBM -
> >> there are a lot of vultures out there - but at certain price point
the
> >> purchase might make sence even for IBM.
> >>
> >> NNN
> >
> > Realistically, I still don't think a buyout is gonna happen. I think
an
> > alternative theory is that AMD and IBM might enter into a
joint-venture
> > of some sort. It's a bit more than the alliance that they got now, and
a
> > bit less than a merger.
> >
> > However, to play devil's advocate, here's the reasons why I think IBM
> > might actually want to buyout AMD. Most people think that IBM is
trying
> > to divest itself of all of its hardware businesses and become only a
> > software and services company. That's actually a bit too simplistic,
IBM
> > is really just divesting itself of low-margin hardware businesses. A
low
> > margin business these days would be defined as anything that can be
> > produced in Asia with lots of little hands turning screwdrivers, and
> > which return just a few dollars more than it costs to make them.
That's
> > why IBM has gotten rid of its PC business, but not its servers. It's
> > gotten rid of its hard disks, but not its storage systems. It's gotten
> > rid of its inkjets but not its networked lasers. Etc.
> >
> > In this light, AMD does not fit into this category. First off, you
don't
> > need a lot of labour to make chips (i.e. hundreds of little hands
> > turning screwdrivers), most of it is already automated. Labour costs
and
> > real estate costs are minor expenses in this environment. You can put
a
> > fab right in the middle of the most expensive sections of downtown
Tokyo
> > or New York, or in the most remote deserts of China, and the cost to
> > make the chips won't vary that much. And second of all, the margins
that
> > chips get are pretty decent.
> >
> > Another issue is that it is widely believed that AMD has a poison pill
> > hidden inside its license with Intel. It is thought that a clause
states
> > that Intel has the right to revoke AMD's x86 license if a buyer takes
> > out a majority interest in AMD. That's why AMD hasn't been bought out
> > after all of this time already. The only way AMD could change hands is
> > if the buyer also has its own x86 license from Intel, and IBM is one
of
> > the few that has that.
> >
> > Also AMD's current losses are as a result of a lack of enough
chipmaking
> > capacity: the more chips it makes, the closer it is to break-even with
> > its fixed costs. Fixed costs, rather than variable costs, are the
> > majority of AMD's costs. So for AMD the more chips it can make within
> > its own walls, the better it is. If it outsources to outside places
like
> > Chartered or even a separate IBM, it will not be contributing to
paying
> > down its own fixed costs. However, if it is part of IBM, then IBM's
fabs
> > are AMD's fabs, and internal capacity goes up immediately without even
> > needing to build a fab.
> >
> > It's also been said that IBM could've taken out AMD way back in 2000
> > when AMD's stock price was also this depressed, but it didn't. So why
> > should it bother now? But back in 2000, IBM didn't know if AMD's
> > upcoming Opteron and Athlon chips would've been a hit, but now it
knows
> > that AMD has some traction with its chips. Afterall, AMD was able to
> > technologically dominate Intel for 3 full years, from 2003 to 2006.
> > Also, AMD has a gotten a fully established graphics business now,
which
> > is something that it didn't have in 2000 either. Neither CPUs nor GPUs
> > are yet a commodity business.
> >
> > Yousuf Khan
>
>
> Out of curiosity, where would Intel be today had IBM not picked
> their chip for the original IBM PC?
Or where would they be if IBM hadn't floated their boat in the mid-
80s, or sold the shares back (ignoring the fact that IBM needed the
money themselves by the end of the '80s).
--
Keith
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