AMD Split, Spinoff in the Works?

Might troubled chip maker AMD (AMD) soon join Hewlett-Packard (HPQ), Symantec (SYMC) and Computer Science Corp. (CSC) among the ranks of IT heavyweights splitting operations in two?

According to a new Reuters report, break-up or spinoff discussions among AMD’s top brass are in the works. The report, which cited three people familiar with AMD’s internal discussions, said the company is considering splitting its graphics and licensing business from its server unit selling high-powered chips for data center deployments.

AMD reportedly has contracted with a consulting firm to help the vendor assess its options, including ways in which it could break up the company or spin off a segment into a separate operation, Reuters said. A substantial stumbling block to any version of splitting the company will be preserving cross-licensing agreements such as the deal AMD currently holds with Intel (INTC).

While AMD has yet to decide on a future path, chief executive Lisa Su is said to be determined not only to arrest the chip maker’s losses but also to position the company on a more competitive plane with Intel.

AMD issued a statement over the weekend in which it denied that it is considering splitting or spinning off its operations. An AMD spokesperson told ExtremeTech that “While we normally would not comment on such a matter, we can confirm that we have no such project in the works at this time. We remain committed to the long-term strategy we laid out for the company in May at our Financial Analyst Day.”

AMD is said to have previously bandied about but rejected the idea of splitting the company, Reuters sources said. Su, however, apparently has brought the option back to the bargaining table in a willingness to consider multiple options.

In mid April, AMD delivered Q1 2015 results under forecast with revenue falling 26 percent from the same time last year to $1.03 billion along with a net loss of $180 million, or $0.23 a share. On a sequential basis, AMD pared its losses from Q4 2014 when it recorded a net loss of $364 million, or $0.47 a share.

The company blamed weaker than expected desktop and notebook sales and a seasonal slide in the semi-custom SoC business, although it expressed optimism about long-range growth. As part of its overall strategy to simplify operations, AMD said it is exiting the SeaMicro dense server systems business immediately.

AMD said it expects Q2 2015 revenue to fall another 3 percent sequentially.