Rumor: Dell might buy AMD

AMD shares were up 5% yesterday based on a rumor that the company could be up for sale, according to ZDnet. The possibility that AMD would be available for purchase, and that Dell may be the company to make the acquisition, was started by Barrow’s, who said,

I would say the recent departures of senior executives — COO Robert Rivet last week, CEO Dirk Meyer back in January — is still unexplained and can lead to all kinds of speculation.

There’s not a lot of color on the rumor at this point. Is Dell considering making a more integrated kind of product line? Talk about a change in strategy.

While this really is nothing but a rumor (Barrow’s calls it “chatter” and “a far-fetched possibility”), the fact that upper management at AMD has been jumping ship since the beginning of the year has analysts looking at the possibility of new leadership for the company.

According to ZDnet, Dell would have to pay upwards of $6 billion for AMD. It’s no small fee, but Dell would profit tremendously from such a partnership. Being a leader in direct sales and build to order consumer PCs, the acquisition of the second largest chip maker in the world can only help tighten up their already competent third-party value chain.

With deals like Intel buying security firm McAfee for a similarly hefty price, it seems that large shifts in company vision are looked highly upon by the market. The fact that investors were happy about a possible merger of the two companies only strengthens the possibility that AMD will be looking for new management sometime in the near future.

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