Worldwide lawsuits against Intel and four straight quarterly losses have distracted AMD during its integration of ATI Technologies, but the merger remains on track, according to industry analysts.
AMD's acquisition of ATI for $5.4 billion, announced in July 2006 and completed on 25 October 2006, was viewed as a potent weapon in AMD's attempt to dent Intel's domination of the x86 processor market.
The lawsuits against Intel and financial losses came at a critical time, when AMD's management needed help in integrating the ATI acquisition and making ATI employees understand AMD's culture, said Jon Peddie, president of Jon Peddie Research.
AMD filed anti-trust lawsuits alleging monopolistic behaviour against Intel in the US and Japan, and lodged complaints with the European Commission, the Korean Fair Trade Commission and Japan Fair Trade Commission. The distraction was compounded by the departure of key executives, including David Orton, former president and CEO of ATI, who resigned as executive vice president of AMD in July after only 10 months.
AMD didn't have any internal problems, and Orton left on his own accord, Peddie said. "A little redundancy will always occur in all organisations. It's not surprising to see people shift," Peddie said. However, outside speculation about the departure may have distracted AMD during the integration, he said.
AMD also took an acquisition-related charge of $76 million, or 14 cents per share, in the third quarter of 2007 ended on 29 September. That added to the quarterly net loss of $396 million.
Despite the distractions, AMD is pulling its resources together to ensure that the ATI merger goes smoothly.
"The merger has allowed AMD to merge its plans with ATI, which were very similar prior to the acquisition." Peddie said. Both companies wanted to amalgamate the CPU with the graphics processor, and the acquisition puts them in a position to do so.