Compaq could snap up AMD

Share price makes it vulnerable

Rumour Speculation mounted today that the massive drop in Advanced Micro Devices' (AMD) share prices over the last two weeks had made it vulnerable to one of its suppliers, Compaq-Digital. IBM had previously been interested in taking over AMD but has decided that its Microelectronics division is not its top priority. Its top priority is services. Just after Christmas, IBM announced it was doing the outsourcing for genetic engineering company Monsanto. Because of a FTC ruling, Intel is forced to make DEC Alpha chips for Compaq but, at the time, a judge said other fabrication plants had to make the 64-bit chip. AMD and IBM were the obvious choices as alternative fabs to Intel. If Compaq bought AMD, it would square a circle with the FTC and also give Eckhard Pfeiffer's company much needed fabrication plants of its own. The price of AMD's stock currently stands at $17, down from a 52-week high of nearly $34. And Compaq is still liquid. ®

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