Summary
Look at the balance sheets. NVIDIA would be nuts to do the merger.
Analysis
As of the end of January NVIDA had net tangible assets of $1.877B and AMD had NEGATIVE net tangebile assets of over 1/2 a billion dollars at the end of December. Not clear that AMD will survive in its current form. Why should NVIDIA jeaopordize its existance by merging with AMD?
The story gets worse. Intel is trying to take away the licensing rights for the X86 platform because AMD has given away control of its manufacturing. If Intel prevails in the courts or gets more money for the license that will be another major negative. There is no upside for AMD at all in this fight.
If you took away the ability to manufacture X86 products then the overlap between the former AMI and NVIDIA reduces the value of the transaction by some large percentage. And that of course assumes that Justice won't want to examine the combo for some monopolisitc issues.
AMD needs a buyer and its unclear that NVIDIA has the resources. Until the Intel mess is cleared up you don't even know what you are getting.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
