Up 2% as shares of AMD Investor Reacts Positively To Handle SeaMicro:

Thursday, March 1st 2012. | Hardware News

AMD-LogoInvestors bid up shares of Advanced Micro 2% in Thursday trading after the processor designer said Wednesday it will acquire low-power micro server vendor SeaMicro in a $334 million deal.

The deal is the first major acquisition by Rory Read, a Lenovo veteran who was named AMD Chief Executive in August in a bid to turn around a company that has struggled to keep up with larger rival Intel over the past few years.

Analysts don’t expect SeaMicro to change AMD’s near-term prospects. However the acquisition fleshed out promises made by AMD’s management team earlier this year that the companny will mix and match its own intellectual property with technology developed by others in an effort to pursue the fast-growing market for compact, power-efficient servers powering next-generation cloud computing applications.

Bobby Burleson at Canaccord Genuity reiterated his ‘buy’ rating on AMD:

We believe this acquisition accelerates AMD’s roadmap in the fastestgrowing server segment by bringing disruptive system design IP in house… SeaMicro’s fabric technology and system design capability, coupled with AMD’s server technology, will help AMD deliver leading-edge data center servers. IDC forecasts a 15% CAGR for micro-servers through 2015.

Sujeeva (Suji) De Silva at ThinkEquity maintained a ‘hold’ rating and a $7.00 price target on the stock:

We believe the acquisition strengthens AMD’s ability to target one of the fastest growing server segments, cloud servers, which represent 15% of the overall server market. We believe AMD’s traditional server processor roadmap remains unchanged, and that SeaMicro’s fabric technology can instead help AMD penetrate low power cloud platforms.

Patrick Wang, at Evercore Partners maintained an ‘equal-weight’ rating and a 12-month target price of $6:

While SeaMicro looks like a microserver vendor on the outside, the company has developed and leveraged its proprietary fabric IP derived from supercomputer technology. Looking to bolster its SOC toolbox, we feel AMD was highly motivated to acquire SeaMicro and its fabric IP. We expect hints of SeaMicro to show up in AMD’s CPU roadmap several years out…Given the systems nature of SeaMicro, the deal doesn’t directly address or improve AMD’s competitive positioning for its core server product. We look for gradual improvement in AMD server share as Interlagos ramps, likely to be challenged when Romley ramps. Mgmt will begin shipping AMD based SeaMicro servers in 2H12 – likely with Opteron chips and possibly with Fusion APUs.

Cody Acree, Williams Financial Group reiterated his ‘buy’ rating and $12 target price:

AMD spoke several times of an “ambidextrous technology approach”, which leads us to believe that SeaMicro is likely to work toward an agnostic solution, regardless of AMD, INTC, or Arm architectures.While SeaMicro to date has offered stand alone “fabric” chip solutions, AMD’s goal is to bring this technology into a system-on-a-chip, that first integrates with AMD’s solutions, but eventually could be used to bolt on to any type of processor core to add increased power efficiency and performance.

Related For Up 2% as shares of AMD Investor Reacts Positively To Handle SeaMicro: