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| Intel to pay AMD $1.25 bn, settle all disputes |
| Bloomberg / San Francisco Nov 13, 2009, 00:44 IST |
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Intel Corp agreed to pay Advanced Micro Devices Inc $1.25 billion as part of a legal settlement that ends a four-year dispute between the world’s two largest computer-processor makers. AMD stock rose as much as 27 per cent.
The settlement includes all antitrust litigation and patent cross-license disputes, the companies said in a statement. The companies agreed to new a 5-year cross-license pact and will give up any claims of breach from the previous agreement. Intel also agreed to abide by a set of business-practice provisions.
AMD sued Intel in Delaware in 2005 alleging it controls the market for microprocessors, in part by providing discounts to customers that avoid AMD’s products. Intel had 82 per cent of the processor market at the end of the third quarter, according to Mercury Research in Cave Creek, Arizona. AMD had 18 per cent.
“AMD is going to be perceived as the big winner here, but the bigger winner is Intel,” said Hans Mosesmann, an analyst at New York-based Raymond James & Associates. “Instead of writing a check for $10 billion over time, they write one for $1 billion.”
Mosesmann has a “neutral” rating on AMD’s stock, an “outperform” on Intel and doesn’t own either.
AMD, based in Sunnyvale, California, rose $1.11, or 21 per cent, to $6.43 at 11:03 am in New York Stock Exchange composite trading and earlier reached $6.73. The shares had more than doubled this year before. Intel added 3 cents to $19.87 in Nasdaq Stock Market trading and had gained 35 per cent this year before.
AMD has posted 12 straight quarterly losses and its sales have lagged behind those of Santa Clara, California-based Intel. AMD is trying to regain the 25 per cent market share it had in 2006. The companies said the settlement lets them focus on product innovation and development.
“AMD gets cash, which is nice. But this doesn’t change anything,” Mosesmann said. “Their chips are not faster or cheaper all of a sudden.”
Intel had about $12.9 billion in cash and short-term investments at the end of September, compared with about $2.5 billion for AMD.
The settlement is the largest in the US so far in 2009, according to data compiled by Bloomberg. The second-largest, announced in April, covered an agreement by Qualcomm Inc to pay Broadcom Corp $891 million in cash over four years to en a patent dispute over hand-set technology.
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