In 2006, Advanced Micro Devices Inc. made a
power play against chipmaker Intel Corp., with its cash-heavy $5.6 billion acquisition of graphics chip maker ATI Technologies Inc. Now, it seems, efforts to integrate the company's largest-ever acquisition, by about $4.8 billion, are at least partially responsible for weighing it down. AMD, which will announce its first-quarter earnings on April 17, has said more than 1,600 employees (10% of its work force) will be out of work
by September. It also warned shareholders of lower than expected first-quarter
sales. Product delays and a weakened PC chip market have also hurt AMD.
It wasn't supposed to be this way. When AMD bought ATI in July 2006, the company
predicted the creation of a "processing powerhouse" and was optimistic about integration. AMD executive vice president and chief administrative officer Tom McCoy even noted the companies' "cultural fit." At its core, though, this integration was about technology, specifically stitching together AMD's microprocessing business with ATI's graphic chipset business, and in the end that didn't happen -- at least not according to plan.
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