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Investors buy into AMD-ATI tie-up rumour?

ATI shares up as rival's dip

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Is ATI about to be acquired by AMD? You might well think so looking at the graphics chip company's share price in early Nasdaq trading today - and that of its arch-rival, Nvidia.

ATI shares opened at $16.22 after closing yesterday at $15.77 - a jump of 45 cents. Relatively heavy trading subsequently lifted it to $16.55. Nvidia's stock, by contrast, opened well below it closing price of $19.93 at $18.18, a fall of $1.75. Early morning trading saw NVDA shares traded for as little as $17.87.

AMD's stock opened at $19.34, down from $21.57 at close of play yesterday. A sign of the market's uncertainty about the upside for the company should it buy ATI? More likely a reaction to last night's Q2 earnings announcement, which saw big year-on-year gains but were down on the previous quarter's figures.

It's certainly possible to read into the figures expectation of an ATI-AMD marriage. ATI's shares are rising in anticipation of an acquisition, while rival Nvidia's are falling because of the impact such a deal might have on the company, which as close ties to AMD.

The AMD-ATI tie-in was first mooted by RBC Capital Markets analyst Apjit Walia at the end of May. He didn't offer any evidence for the suggested deal, he simply highlighted the synergies between the two firms given AMD's stated goal to increase production.

Then earlier this month, one Chinese-language site claimed the two firms had agreed the terms of the deal and were preparing their statements to the market - presumably timed to appear after AMD published its Q2 figures which, of course, it now has. It was alleged today by The Inquirer that AMD and ATI will announce their plan to merge on Monday. ®

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