AMD shares gain on IBM takeover speculation
Advanced Micro Devices shares rose as much as 8 percent Wednesday (Jan. 23) on speculation that the microchip maker might be bought by IBM, but analysts said the chances of an acquisition were slim.
Spokesmen for IBM and AMD, based in Sunnyvale, Calif., declined to comment on the rumor.
Shares of AMD, the second-largest maker of microprocessors after Intel Corp, added as much as 55 cents to $7.39 and were up 23 cents or 3.4 percent at $7.07 in afternoon trading. International Business Machines Corp stock was down $1.73 or 1.7 percent at $99.58 on the New York Stock Exchange.
"The takeover of AMD by IBM has been mentioned before and with AMD shares being so low, it might be a good time for IBM to acquire them," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.
AMD call options were trading higher than usual because of the rumor, he added.
IBM of Armonk, New York, has had a research and development expense-sharing agreement with AMD, and analysts have speculated that AMD might want to use IBM's East Fishkill, New York, chip-fabrication plant to build microprocessors.
An acquisition of AMD would be "a pretty low-probability event because IBM is moving away from hardware and manufacturing and moving to software and solutions," said Ashok Kumar, an analyst at CRT Capital Group. "I don't think IBM wants the bragging rights to go up against Intel."