SAN FRANCISCO (03/30/2000) - Advanced Micro Devices Inc. (AMD) is to keep its network products division, not sell it off as previously determined, the U.S. chip maker announced today.
The decision reflects both the company's improved financial position and the desire of AMD's recently appointed president to hold onto the staff in the network unit, AMD spokesman John Greenagel said today in a phone interview.
AMD announced in October of last year that it had engaged Donaldson, Lufkin, & Jenrette and Salomon Smith Barney to look for a buyer for its communications group, which contains both AMD's network products division and its communications products division. [See "UPDATE: AMD Posts Hefty Loss, But Beats the Street," Oct. 7, 1999.]The chip maker now intends to retain the network products division, although the communications products division is still up for sale, according to Greenagel.
The network products division produces ICs (integrated circuits) for data communications and computer connectivity, while the communications products division supplies ICs used in telecommunications infrastructure.
"We still expect to conclude the sale of our communications products division in the first half of this year." Greenagel said. "That has been our timetable all along." Although he wouldn't be drawn on the identity of a possible buyer, Greenagel said AMD has seen interest from potential purchasers for both its network and the communications product units.
"The communications product division is not central to our long-term strategy," Greenagel said. "Our customers and employees will be better off (at a company) where the division is their central focus, is strategic to the company, and (where) they will invest in it."
Although AMD had planned to sell the network products division, the company had always intended to retain the intellectual property rights behind the actual products, Greenagel said.
He explained that with the appointment of long-time Motorola Inc. executive Hector de Ruiz as AMD's new president and chief operating officer towards the end of January, the company had a change of heart over selling the network division. [See "AMD: Ruiz 'Ideal Choice' as New President, COO," Jan. 25.]"It makes more sense to hang onto the people as well as to the intellectual property," Greenagel said. "Our improving financial position also gave us the flexibility to look at other options and re-evaluate our strategy." The company performed strongly in its most recent quarter, exceeding Wall Street analysts' expectations due to strong customer demand for PCs powered by its chips. [See "AMD Boasts a Bumper Fourth Quarter," Jan. 19.]The decision to hang on to its network products unit has nothing to do with bitter chip rival Intel Corp.'s ever-increasing focus on its network business, Greenagel said. "It's not based on any concern about our rivals, it's to do with our long-term strategy," he added.
AMD's network products division will cease to exist as a unit, with its staff being subsumed into two existing company organizations -- AMD's processor group, known as the computation products division, and the vendor's advanced architecture labs, Greenagel said.
AMD is based in Sunnyvale, California, and can be reached at +1-408-732-2400 or on the World Wide Web at http://www.amd.com/.