Intel--Nvidia merger or acqusition. unlikely, but possible ?

http://money.cnn.com/2006/07/24/tech...ntel/index.htm

AMD-ATI deal boosts shares of Nvidia

Speculation about a possible partnership between Nvidia and Intel has
driven the shares up nearly 10%.

By Amanda Cantrell, CNNMoney.com staff writer
July 24 2006: 3:23 PM EDT

NEW YORK (CNNMoney.com) -- Regardless of what the market makes of the
impending nuptials of PC chipmaker Advanced Micro Devices and graphics
chip maker ATI Technologies, one clear winner in the match-up appears
to be Nvidia, at least as far as traders are concerned.

Shares of Nvidia (up $1.66 to $19.43, Charts), one of the largest
makers of graphics chips for computers and other consumer electronics -
and the number one competitor to ATI (up $3.00 to $19.56, Charts) -
were up nearly 10 percent in mid-day trading. AMD (down $0.90 to
$17.36, Charts) said today that it will spend $5.4 billion to acquire
ATI in a cash and stock deal that is expected to close in the fourth
quarter.
NVD.mkw.gif

Analysts and investors say that the spike in Nvidia's shares could be
attributed in part to speculation that Nvidia is in talks with Intel
(up $0.28 to $17.43, Charts), the number one maker of chips for PCs, to
supply graphics chips to the company.

But people in the business are divided on whether today's news means
that Nvidia and Intel will reach an agreement, or whether such a
partnership would take the shape of an out-and-out acquisition.

And still others are not convinced that today's news is beneficial to
Nvidia at all.
N-convenient side effect

David Wu, an analyst at Global Crown Capital, said the news of ATI's
sale to AMD could be bad news for Nvidia in the short term.

That's because Nvidia has done brisk business selling chipsets, or the
pairs of chips that surround microprocessors, to AMD, particularly for
AMD's popular Opteron server chips. Those ties may have to be severed
in light of the deal, according to Wu.

"AMD has been very good to Nvidia and Nvidia has been very good to
AMD," Wu said. "If you were to look at Nvidia's chip set business, it's
20 percent of total revenues, and 90 percent of that is for the AMD
platform. They built a very successful premium brand image on the AMD
side of the business and very little on Intel."

Eric Ross, an analyst with ThinkEquity Partners, agrees that today's
news is bad for Nvidia because of its ties to AMD.

"They've seen their biggest growth in revenues specifically because of
the partnership with AMD and that just goes away (with the sale)," said
Ross.

Ross also believes Intel will have to come up with its own strategy for
making high-end graphics processors. Intel currently makes graphic
processors, but these are designed for low-end machines, unlike the
souped-up processors that Nvidia and ATI make for demanding,
graphics-heavy applications such as gaming. But he's not convinced that
buying Nvidia is on Intel's mind.

"It's possible, but it's less likely than you'd think," said Ross.

That's in part because of Intel's well-documented problems of losing
market share and slowing growth, which have caused the chip maker to
put up several consecutive quarters of weak performance. That led to a
broad restructuring at the company, which is still taking place.

Analysts agree that while today's news means Intel will likely need to
come up with its own approach to high end graphics processors, buying
Nvidia outright is not necessarily the answer.

"Intel will not change course and buy Nvidia," said Hans Mosesmann,
senior vice president and semiconductor analyst at Moors & Cabot.
"They're on a mission to reduce cost, become more focused, and get in
tune with their core competencies."
Nvidia + Intel? Maybe, maybe not

But unlike Ross, Mosesmann does not believe AMD's plans to buy ATI
necessarily spells bad news for Nvidia. Mosesmann estimates that
chipset sales account for roughly 15 to 16 percent of Nvidia's total
sales, and that about half of those chipsets are going to AMD's Opteron
server chips.

Mosesmann acknowledges that estimates of the percentage of Nvidia's
total sales that come from chipsets vary, and that some analysts think
the number is a bit higher than he does.

"ATI doesn't do chipsets for servers, so that business is not going
away," said Mosesmann. "The chipset business that could be lost is
maybe in the mid- to high-single digits [of Nvidia's revenues] at
best."

Jane Snorek, senior research analyst with FAF Advisors, is among those
convinced that Intel would not buy Nvidia, in part because she thinks
the shareholder backlash would be severe.

"If Intel bought Nvidia, I think that would be the end of (Intel
president and CEO Paul) Otellini," said Snorek, whose firm does not own
any chip stocks in the funds she advises. "AMD paid a 25 percent
premium on ATI and they missed their numbers, and the stock's been
hammered. There's no way [Intel] could afford" to take that risk, she
said.

But she does believe Nvidia may well strike a deal with Intel, and one
that could benefit both companies in the long run.

"If Nvidia feels threatened by this AMD/ATI partnership, it could form
a partnership with Intel, which could really use a reliable partner on
the high end of graphics chips," said Snorek.

Kevin Landis, chief investment officer of Firsthand Funds, which runs
mutual funds specializing in tech stocks, agreed that a partnership
between Intel and Nvidia in which the latter supplied high-end chips to
the former could make sense.

But he's not so sure that Intel buying Nvidia is necessarily out of the
question.

"The issue with Intel is not on the balance sheet, it's on the income
statement," said Landis, whose funds own small positions in Intel and
AMD but not in Nvidia or ATI. "It's lack of growth, issues with profit
margins, and competitiveness. The balance sheet is so darn strong, most
shareholders would say whatever you need to do to get growing again, do
it."

Landis noted that with Nvidia currently sporting a market cap of
roughly $7 billion, the purchase would be less costly for Intel, with a
market cap of roughly $101 billion, than it was for AMD to buy ATI.
AMD's market cap is about $8.5 billion, while ATI's is about $5
billion.

"Intel has disappointed people with lack of growth or not always having
a best of breed product," he said. "But say what you will, they
continue to make a lot of money, and they could spend quite a bit more
on Nvidia then AMD spent on ATI and they wouldn't feel it nearly as
much."

Ross of ThinkEquity Partners does not own shares of AMD, ATI, Intel or
Nvidia but his firm makes a market in shares of Intel and Nvidia.
Mosesmann of Moor's and Cabot does not own shares of the companies he
mentioned, and his firm does not have banking ties to the companies. Wu
owns shares of ATI and Intel, but his firm does not have banking ties
to the company.

"AirRaid" wrote in message ups.com...
http://money.cnn.com/2006/07/24/tech...ntel/index.htm

AMD-ATI deal boosts shares of Nvidia

Speculation about a possible partnership between Nvidia and Intel has
driven the shares up nearly 10%.

By Amanda Cantrell, CNNMoney.com staff writer
July 24 2006: 3:23 PM EDT

NEW YORK (CNNMoney.com) -- Regardless of what the market makes of the
impending nuptials of PC chipmaker Advanced Micro Devices and graphics
chip maker ATI Technologies, one clear winner in the match-up appears
to be Nvidia, at least as far as traders are concerned.

And that's not because of Intel/Nvidia merger speculation.
It's because AMD shareholders are about to get soaked,
paying a 25% premium for stock in a crap company who
can't write a decent Windows driver to save their lives.

VERY unlikely that Intel will seek to acquire NVidia.

First, Intel has their own video chip group, which does the video in the
chipsets (the Intel GMA's .... Graphics Media Accelerators). Yes,
that's been low end, but they could do high-end if Intel wanted to.
Intel simply hasn't wanted to.

Second, a major reason for AMD's acquisition of ATI isn't graphics at
all, it's that ATI is now doing chipsets, and AMD wanted to acquire a
more robust chipset capability to better compete with Intel, which makes
superb chipsets (AMD used to do chipsets, 4-6 years ago, but stopped;
now they want to get back into that, from all appearances).

Third, Intel is likely to be barred from any significant acquisition
because of their size and anti-trust / monopoly considerations. AMD, as
the small underdog, had no such anti-trust or monopoly concerns.


AirRaid wrote:

http://money.cnn.com/2006/07/24/tech...ntel/index.htm

AMD-ATI deal boosts shares of Nvidia

Speculation about a possible partnership between Nvidia and Intel has
driven the shares up nearly 10%.

By Amanda Cantrell, CNNMoney.com staff writer
July 24 2006: 3:23 PM EDT

NEW YORK (CNNMoney.com) -- Regardless of what the market makes of the
impending nuptials of PC chipmaker Advanced Micro Devices and graphics
chip maker ATI Technologies, one clear winner in the match-up appears
to be Nvidia, at least as far as traders are concerned.

Shares of Nvidia (up $1.66 to $19.43, Charts), one of the largest
makers of graphics chips for computers and other consumer electronics -
and the number one competitor to ATI (up $3.00 to $19.56, Charts) -
were up nearly 10 percent in mid-day trading. AMD (down $0.90 to
$17.36, Charts) said today that it will spend $5.4 billion to acquire
ATI in a cash and stock deal that is expected to close in the fourth
quarter.
NVD.mkw.gif

Analysts and investors say that the spike in Nvidia's shares could be
attributed in part to speculation that Nvidia is in talks with Intel
(up $0.28 to $17.43, Charts), the number one maker of chips for PCs, to
supply graphics chips to the company.

But people in the business are divided on whether today's news means
that Nvidia and Intel will reach an agreement, or whether such a
partnership would take the shape of an out-and-out acquisition.

And still others are not convinced that today's news is beneficial to
Nvidia at all.
N-convenient side effect

David Wu, an analyst at Global Crown Capital, said the news of ATI's
sale to AMD could be bad news for Nvidia in the short term.

That's because Nvidia has done brisk business selling chipsets, or the
pairs of chips that surround microprocessors, to AMD, particularly for
AMD's popular Opteron server chips. Those ties may have to be severed
in light of the deal, according to Wu.

"AMD has been very good to Nvidia and Nvidia has been very good to
AMD," Wu said. "If you were to look at Nvidia's chip set business, it's
20 percent of total revenues, and 90 percent of that is for the AMD
platform. They built a very successful premium brand image on the AMD
side of the business and very little on Intel."

Eric Ross, an analyst with ThinkEquity Partners, agrees that today's
news is bad for Nvidia because of its ties to AMD.

"They've seen their biggest growth in revenues specifically because of
the partnership with AMD and that just goes away (with the sale)," said
Ross.

Ross also believes Intel will have to come up with its own strategy for
making high-end graphics processors. Intel currently makes graphic
processors, but these are designed for low-end machines, unlike the
souped-up processors that Nvidia and ATI make for demanding,
graphics-heavy applications such as gaming. But he's not convinced that
buying Nvidia is on Intel's mind.

"It's possible, but it's less likely than you'd think," said Ross.

That's in part because of Intel's well-documented problems of losing
market share and slowing growth, which have caused the chip maker to
put up several consecutive quarters of weak performance. That led to a
broad restructuring at the company, which is still taking place.

Analysts agree that while today's news means Intel will likely need to
come up with its own approach to high end graphics processors, buying
Nvidia outright is not necessarily the answer.

"Intel will not change course and buy Nvidia," said Hans Mosesmann,
senior vice president and semiconductor analyst at Moors & Cabot.
"They're on a mission to reduce cost, become more focused, and get in
tune with their core competencies."
Nvidia + Intel? Maybe, maybe not

But unlike Ross, Mosesmann does not believe AMD's plans to buy ATI
necessarily spells bad news for Nvidia. Mosesmann estimates that
chipset sales account for roughly 15 to 16 percent of Nvidia's total
sales, and that about half of those chipsets are going to AMD's Opteron
server chips.

Mosesmann acknowledges that estimates of the percentage of Nvidia's
total sales that come from chipsets vary, and that some analysts think
the number is a bit higher than he does.

"ATI doesn't do chipsets for servers, so that business is not going
away," said Mosesmann. "The chipset business that could be lost is
maybe in the mid- to high-single digits [of Nvidia's revenues] at
best."

Jane Snorek, senior research analyst with FAF Advisors, is among those
convinced that Intel would not buy Nvidia, in part because she thinks
the shareholder backlash would be severe.

"If Intel bought Nvidia, I think that would be the end of (Intel
president and CEO Paul) Otellini," said Snorek, whose firm does not own
any chip stocks in the funds she advises. "AMD paid a 25 percent
premium on ATI and they missed their numbers, and the stock's been
hammered. There's no way [Intel] could afford" to take that risk, she
said.

But she does believe Nvidia may well strike a deal with Intel, and one
that could benefit both companies in the long run.

"If Nvidia feels threatened by this AMD/ATI partnership, it could form
a partnership with Intel, which could really use a reliable partner on
the high end of graphics chips," said Snorek.

Kevin Landis, chief investment officer of Firsthand Funds, which runs
mutual funds specializing in tech stocks, agreed that a partnership
between Intel and Nvidia in which the latter supplied high-end chips to
the former could make sense.

But he's not so sure that Intel buying Nvidia is necessarily out of the
question.

"The issue with Intel is not on the balance sheet, it's on the income
statement," said Landis, whose funds own small positions in Intel and
AMD but not in Nvidia or ATI. "It's lack of growth, issues with profit
margins, and competitiveness. The balance sheet is so darn strong, most
shareholders would say whatever you need to do to get growing again, do
it."

Landis noted that with Nvidia currently sporting a market cap of
roughly $7 billion, the purchase would be less costly for Intel, with a
market cap of roughly $101 billion, than it was for AMD to buy ATI.
AMD's market cap is about $8.5 billion, while ATI's is about $5
billion.

"Intel has disappointed people with lack of growth or not always having
a best of breed product," he said. "But say what you will, they
continue to make a lot of money, and they could spend quite a bit more
on Nvidia then AMD spent on ATI and they wouldn't feel it nearly as
much."

Ross of ThinkEquity Partners does not own shares of AMD, ATI, Intel or
Nvidia but his firm makes a market in shares of Intel and Nvidia.
Mosesmann of Moor's and Cabot does not own shares of the companies he
mentioned, and his firm does not have banking ties to the companies. Wu
owns shares of ATI and Intel, but his firm does not have banking ties
to the company.

On Mon, 24 Jul 2006 23:43:38 +0000, EDM wrote:

"AirRaid" wrote in message ups.com...
http://money.cnn.com/2006/07/24/tech...ntel/index.htm

AMD-ATI deal boosts shares of Nvidia

Speculation about a possible partnership between Nvidia and Intel has
driven the shares up nearly 10%.

By Amanda Cantrell, CNNMoney.com staff writer
July 24 2006: 3:23 PM EDT

NEW YORK (CNNMoney.com) -- Regardless of what the market makes of the
impending nuptials of PC chipmaker Advanced Micro Devices and graphics
chip maker ATI Technologies, one clear winner in the match-up appears
to be Nvidia, at least as far as traders are concerned.

And that's not because of Intel/Nvidia merger speculation.
It's because AMD shareholders are about to get soaked,
paying a 25% premium for stock in a crap company who
can't write a decent Windows driver to save their lives.

Ha! That's funny, cuz they can't seem to write a decent linux driver
either. Partnership or not, all my future computer purchases will be AMD
processorts and Nvidia GPUs, ATI+linux=FUBAR.

Barry Watzman wrote:
VERY unlikely that Intel will seek to acquire NVidia.

First, Intel has their own video chip group, which does the video in the
chipsets (the Intel GMA's .... Graphics Media Accelerators). Yes,
that's been low end, but they could do high-end if Intel wanted to.
Intel simply hasn't wanted to.

Yeah, Intel didn't want to make high-end graphics because it didn't know
how to. You don't think Intel would've passed up a chance to get into
the high-end graphics market, if it could actually make these kinds of
chips. High-end GPUs are more complex than the CPUs from either Intel or
AMD.

Second, a major reason for AMD's acquisition of ATI isn't graphics at
all, it's that ATI is now doing chipsets, and AMD wanted to acquire a
more robust chipset capability to better compete with Intel, which makes
superb chipsets (AMD used to do chipsets, 4-6 years ago, but stopped;
now they want to get back into that, from all appearances).

AMD still does chipsets, it's always the first to market with chipsets
for its own processors when they are first introduced. It then scales
back production to let the partners take over this market. This was also
at a time when it really didn't have enough production capacity to do
its own chipsets and CPUs at the same time, but now it's building
capacity like crazy.

Third, Intel is likely to be barred from any significant acquisition
because of their size and anti-trust / monopoly considerations. AMD, as
the small underdog, had no such anti-trust or monopoly concerns.

Intel spent more than that on acquisitions during the dotcom days. A lot
of those acquisitions are now being shutdown.

Yousuf Khan

Barry Watzman wrote:

VERY unlikely that Intel will seek to acquire NVidia.

First, Intel has their own video chip group, which does the video in the
chipsets (the Intel GMA's .... Graphics Media Accelerators). Yes,
that's been low end, but they could do high-end if Intel wanted to.
Intel simply hasn't wanted to.

Sure, they could do so, and get their asses kicked, just like last
time they tried getting into the high-end 3D-graphics business.

Outside of their main lines, big fat companies like Intel don't do
well against more nimble and focused competition like Nvidia.

Second, a major reason for AMD's acquisition of ATI isn't graphics at
all, it's that ATI is now doing chipsets, and AMD wanted to acquire a
more robust chipset capability to better compete with Intel, which makes
superb chipsets (AMD used to do chipsets, 4-6 years ago, but stopped;
now they want to get back into that, from all appearances).

Not sure why they'd want to compete with Nvidia in the AMD-compatible
chipset market, though... Doesn't seem smart to me.

Third, Intel is likely to be barred from any significant acquisition
because of their size and anti-trust / monopoly considerations. AMD, as
the small underdog, had no such anti-trust or monopoly concerns.

On 24 Jul 2006 15:43:17 -0700, "AirRaid" wrote:

http://money.cnn.com/2006/07/24/tech...ntel/index.htm

AMD-ATI deal boosts shares of Nvidia

Speculation about a possible partnership between Nvidia and Intel has
driven the shares up nearly 10%.

If those guys would only take the trouble to look back 3 days, the shares
have only recovered to where they were last Thursday... after the dump they
took on Friday.

--
Rgds, George Macdonald

very interesting interview of all the major players in the industry
http://www.firingsquad.com/hardware/amd_ati_merger/


this was interesting
http://www.firingsquad.com/hardware/...rger/page7.asp



Morten Brodersen: CEO Third Wave Games (War World: Tactical Combat)

PC hardware industry: If AMD-ATI decides to build high-speed extensions
to the AMD CPU's (or support chips) that enables ATI GPU's to run much
faster using AMD CPU's then it may give AMD-ATI a strategic advantage
in the high-end PC games hardware space. And it may force NVIDIA to
work with Intel to create a competitive alternative. This would
basically split the market into two camps: AMD-ATI and Intel-NVIDIA
(even if Intel and NVIDIA doesn't merge).

EDM wrote:

And that's not because of Intel/Nvidia merger speculation.
It's because AMD shareholders are about to get soaked,
paying a 25% premium for stock in a crap company who
can't write a decent Windows driver to save their lives.



You actually own an ATI card? I doubt someone who doesn't like their
drivers would be stupid enough to buy an ATI card. Or are you? If you
don't own one then you don't know WTF you are talking about. As an owner
of an ATI X800XL and a Nvidia 7900GT I feel qualified in saying that
ATI's drivers are just as good, if not beter, than Nvidia's.

"Garrot" wrote in message news:9Pwxg.235772$Mn5.156002@pd7tw3no...
EDM wrote:

And that's not because of Intel/Nvidia merger speculation.
It's because AMD shareholders are about to get soaked,
paying a 25% premium for stock in a crap company who
can't write a decent Windows driver to save their lives.


You actually own an ATI card? I doubt someone who doesn't like their
drivers would be stupid enough to buy an ATI card. Or are you? If you
don't own one then you don't know WTF you are talking about. As an owner
of an ATI X800XL and a Nvidia 7900GT I feel qualified in saying that
ATI's drivers are just as good, if not beter, than Nvidia's.

Garrot, I've owned ~two dozen video cards over the past
20+ years, going back to Paradise/Video7/etc from the
mid-1980's. I'll give credit where it's due: ATI drivers don't
suck as bad now as they did for 15 years. Yet they're still
lacking in a number of regards: no custom resolutions without
..NET or third-party software, no gamma adjustment etc etc.
Their reliance on .NET is what swore me off of them once
and for all. I installed .NET, it junked up my system so bad
and caused so many problems I had to do a full image
restore just to get rid of it completely.

If their drivers work for you, that's great. They don't for me.