Question:
AMD Shares Up on Hope for a Dell Deal
March 23, 2006, 11:58AM
AMD Shares Up on Hope for a Dell Deal
© 2006 The Associated Press
NEW YORK — Shares Advanced Micro Devices Inc. advanced in afternoon trading on Thursday, as investors pushed the stock up on hope that AMD could land a backdoor deal with Dell Inc. through its acquisition of Alienware, a specialty computer maker that uses AMD processors in some of its desktop and notebook systems.
After Dell announced its agreement to buy Alienware Thursday, shares of AMD, which have traded between $14.08 and $42.70 over the last year, shot up 91 cents, or 2.7 percent, to $35.53 on the New York Stock Exchange. Shares of rival chip maker Intel Corp. were down 10 cents at $19.88, in afternoon trading on the Nasdaq.
It's not a new driver for AMD _ shares shot up in early January on speculation that the chip maker could seal a deal with Dell, and the stock fell later in the month after rumors were quelled.
Michael Dell, chairman and founder of Dell, has only encouraged speculation. At January's World Forum in Switzerland he noted that the company doesn't have an exclusive relationship with Intel, and said Dell has used AMD chips in the past and may use them again.
While investors were optimisitic, Wall Street analysts were skeptical. Michael Masdea, a Credit Suisse analyst, said Dell's acquisition of Alienware doesn't much change AMD's chances of an agreement with Dell.
"It may increase the probability, but if Dell does decide to go with AMD, it's a separate decision they're going to make independent of Alienware," Masdea said.
Likewise, Raymond James analyst Ashok Kumar said Dell's acquisition of Alienware is unlikely to lead to a Dell deal.
"For the foreseeable future, Dell will remain an 'Intel only' house," Kumar wrote in a note.
http://www.chron.com/disp/story.mpl/ap/fn/3743469.html
Answer:
Re: AMD Shares Up on Hope for a Dell Deal
It will be interesting to see what Dell does with the acquisition in terms of boosting sales of AW units. I don't see an immediate benefit for AMD, but we'll see.