Rumor: Dell May Purchase AMD

AMD's inner-turmoil may have positioned it as a prime target for an acquisition by Dell or companies.

Monday AMD saw a sudden 4.2-percent rise in share value by 4pm in New York Stock Exchange composite trading, jumping 35 cents to $8.63 per share. The increase was reportedly due to speculation that AMD may be a take-out target for Dell or other OEMs looking to purchase the nation's second-largest CPU manufacturer.

Currently AMD may be conceived as a prime target. Back in January, Chief Executive Officer Dirk Meyer stepped down from his position after fighting with the board over the company's lack of products in an expanding mobile computer market, and its overall lack of progress in regaining lost shares of the server market. For now Financial Officer Thomas Seifert is acting as interim CEO, but he made it clear he doesn't want the position to be permanent.

Then just last week Chief Operating Officer Robert Rivet and strategy head Marty Seyer announced that they were also leaving AMD. Although the reasons were not provided, it's speculated that the two decided to leave when AMD announced it would conduct an external search for the new CEO. Rivet and Seyer may have assumed that they would not be considered for the position, and quit.

Currently there's no solid proof that Dell is interested in purchasing AMD. As of this writing, the chip manufacturer is worth around $6.5 billion, making it a very hefty purchase. Patrick Wang, an analyst at Wedbush Securities in New York, said that there's no real management team at AMD. He acknowledged all the chatter surrounding the possible sale, but said that an acquisition by Dell is "a far-fetched possibility."

"There’s not a lot of color on the rumor at this point," added Tiernan Ray of the Wall Street Journal (Barron's) in a separate article. "Is Dell considering making a more integrated kind of product line? Talk about a change in strategy."

AMD shares may actually be rising due to the situation with Intel's Sandy Bridge chipset. According to Leslie Sobon, AMD vice president of product and platform marketing, the company has received hardware requests as a direct result of the issue. "We have some customers and retailers who have come to us specifically as a result of Intel's chip problem," Sobon said. "Some retailers have had to take things off their shelves, so they call us to ask what they could get from our OEMs that's similar. And OEMs are asking us for product, as well."

Despite the internal turmoil, stock may be rising simply because AMD is looking to gain more business thanks to manufacturers and retailers seeking out a Sandy Bridge alternative. Still, if Dell does pursue an AMD acquisition (and thus shuns Intel), the company would stand on firmer ground in its fight for market share against Hewlett-Packard, Lenovo and others system builders.

For now, file this whole Dell acquisition business under "RUMOR."