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AMD Needs Revenue Gains, Not Split, to Sustain Rally

Advanced Micro Devices Inc. shares have posted their biggest gains since February in the past week, fueled by speculation that the money-losing chipmaker is considering breaking itself up or spinning off units.

That rally may fizzle on signs that a breakup isn’t in the cards. The company denied a Reuters report on Friday that it has hired advisers to explore a split, saying in a statement it has no such project in the works. Analysts also said a separation of units would be risky and ill-advised.

AMD should remain a single company so it can integrate and improve products that have lost market share to Intel Corp. and Nvidia Corp., according to analysts such as Gus Richard of Northland Capital Markets and Deepon Nag of Macquarie Research. Nag also cited potential regulatory challenges to any plan to sell assets. AMD, which unveiled new graphics chips last week, said it plans to stick to the strategy of expanding into new markets for custom-made chips.

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