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ATI acquisition still weighing on AMD

ATI acquisition still weighing on AMD

AMD announced that it will take a charge of US$880 million related to ATI's former business units in the second fiscal quarter of 2008.

As Advanced Micro Devices tries to cut costs and return to profitability, the 2006 acquisition of ATI continues to weigh on the company.

AMD on Friday announced that it will take a charge of US$880 million related to ATI's former business units in the second quarter of 2008. The charges relate to impaired assets in ATI's former handheld and digital TV business units, which were merged into AMD's consumer electronics group after the acquisition.

The company is announcing its second-quarter results on Thursday.

AMD's acquisition of ATI for US$5.4 billion was viewed as a potent weapon in its attempt to dent Intel's domination of the x86 processor market. However, the company has now reported six consecutive quarterly losses.

In the first quarter of 2008, AMD reported a net loss of US$358 million on revenue of $1.51 billion. The results included $50 million related to ATI's acquisition.

The company on Friday also announced it was taking charges of $32 million related to restructuring, which began in the second quarter in an effort to cut costs. The restructuring is expected to be completed by the end of the year, AMD said in a filing with the US Securities and Exchange Commission.

The bulk of the charges relate to employee severance, the company said.

The company is also taking an impairment charge of US$36 million related to the company's short-term investments, including a $24 million charge for investments in Spansion, a flash memory company that was spun off from AMD in 2005.


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