Prediction: In a year, NVIDIA buys the combined AMD/ATI

Hmm, I like my Creative drivers more than my Nvidia drivers right now. As the Nvidia ones have caused me many pains lately. While since the install the Creative ones have went along nice and happy and never had one issue.

Also, frankly I see no point in Nvidia buying Creative. What do they have to offer? Creative has a decent MP3 player business, sound cards, and? Since Nvidia is going to be in the next Ipod I'd see them having no reason to have a MP3 player division and sound cards? Not a big enough market for Nvidia.

The 3DLabs stuff is probably worthless to them at this point.

 

NV won't (if ever) buy Creative because of their sound card line-up. NV can produce just as good (if not better) sound sub-system, and they proved it years ago, with Soundstorm. A reason they don't currently incorporate it into their chipset/platform is probably because Creative is one of NV's biggest AIB (GeForce series) partners in Asia.

 

Sooner or later one of the various integrated sound card companies will put out a product that beats all of Creative's offerings. Then, Creative will probably sue them out of existance, or less likely, produce a decent product. Some days I just wish Creative would have disappeared 5 years ago. I'd rather have a round hole in the market waiting to be filled, then a square peg jammed into it. If Nvidia buys them out, it can only be a good thing. Hell, if anyone buys them out, it's fantastic news, but I think Nvidia would be a good match.

 

NVIDIA won't buy DAAMIT and NVIDIA wont buy Creative Labs.

Over the next 18 months expect a lot of restructuring at AMD and ATI which will make them vulnerable but not to the extent that someone will buy them in a hostile takeover bid.

I also expect Intel to have one big struggle gaining momentum on the OEM and retail side of things with Core 2 and once that is ironed out AMD to hit back with 4x4 and then K8L. Intel are not doing well on the retail front period even now.. they do not have the infrastructure in place to support Conroe for a start and it is at least 2 months off before they do.

AMD are not going to die because of Core 2... and the ATI purchase is going to bolster them in a big way near to mid term, not harm them.

 

All that may or may not be true, but the diference in sales between Intel and AMD is still huge:

http://www.hkepc.com/bbs/attachments_dir/ext_jpg/top15-wss-report_UCHbpBeiur9i.jpg

 

http://www.theregister.co.uk/2001/07/23/amd_grabs_50_of_top/

Retail side Intel has been haemerroaging.. (I spelt that wrong Im sure)...

Edit.. this link better illustrates what I meant:

http://news.com.com/Strike three for Intel/2100-1014_3-6045843.html?tag=nefd.top

 

Actually, on the OEM side (which is where the real money is, if not the largest margins) AMD was having a big struggle gaining momentum when they had a vastly superior product. Now that the performance crown will be back to Intel for the foreseeable future ,what do you think will happen ?

And we all know how being "the king of retail" helped 3Dfx in the end, right ? From the same article you link : "AMD's surge can be seen most strongly in the U.S. retail market, which accounts for about 9 percent of global PC shipments.".

 

Even if AMD does loose some of its retail, its going to gain in OEM no matter what if Dell even starts shipping one model with an AMD inside it. That is a huge gain, and Dell is going towards it even WITH AMD now losing the performance crown.

The OEM market is not about performance, not at all. As long as they're within respectibility of each other, the OEM's dont care about performance.

They care about MONEY. Price. AMD will go cheap with Dell and Dell will like that. Now that AMD has ATI to do the complete rundown, AMD OEM will only go up!

 

That's for the whole product range, including microcontrollers, flash mem etc. Tells us nothing about the retail PC-related sales.

 

I said nothing about retail PC component sales...

 

AMD's retail presence in Europe is incredibly strong as well. I dont have figures but I would think it is in line with what we saw in the US.

I think going forward AMD will lose a few OEM design wins but as I stated before AMD will be back soon as it is a smaller and more nimble company than Intel. AMD wont be able to afford losing marketshare and mindset it has built up with the Athlon 64 brand.

 

I know, I just wanted to point it out in the sense that those numbers don't help here

 

I don't know a single gamer here who bought an Intel PC in the last 2-3 years or so. Not one.

 

You can't buy someone with 1:1 asset parity. What's the point? Ok, I'll give you $10 if you give me $10. There is no profit in the deal.

Besides which, Jensen won't go for deals which turn NV into a bit player with loss of control. Jensen would want to be CEO of AMD.

Moreover, there would be big regulatory questions as to whether such a merger would even be allowed, as NVDA and ATYT would represent most of the market, and practically 100% of non-integrated. Intel would be the first to complain to the DOJ.

 

Umm, not exactly...

Sorry, just being a bit nitpicky, but this isn't exactly true. A lot of the reasoning behind a buy-out is on cost of capital, and ideal Debt-to-equity ratios. In theory if my cost of debt is lower than my cost of equity, and I could issue enough debt to buy my competitor; the new debt/equity ratio (in the hypothetical example above, 1:1) puts me in a stronger position. Of course, you could ask why not simply restructure without the purchase since there are many extra costs associated with a takeover/merger, but it's not quite as simple as "there's no profit" to be had. Also, oddly, many of these decisions have nothing to do with "real value", and often the books are spun to make it look like a good thing, even if it isn't necessarily (Goodwill is a great place to dump excess costs).

 

well, very true, but a leveraged buyout is a different animal than a stock swap and historically was done for different reasons than presumably NVidia would be looking at. In any case, I was less than precise, since I was not really talking about market cap, but net assets. Market cap isn't really a relevant metric without knowing who is holding most of the shares.

Anyway, whether or not an LBO would be a good idea for NVidia would go beyond corporate raider concerns, and whether or not they think it would be good for their future growth. Certainly eliminating their largest competitor would be one justification, but they'd be giving up alot in the merger, and it is unlikely it would be approved. An LBO of AMD would require NVidia to borrow vast sums, which would have to be counted against earnings and would probably take a long time to recover from.

Seems like a big gamble for NVidia to take.

 

Agreed.

 

If we look at past acquisitions, Nvidia tends to buy "small and strategic", rather than "big and uncertain".
Uli, 3dfx (remember, it was purchased for a mere 70M, of which just 1M was hard cash, the rest was a stock swap), Pace Soft Silicon, Hybrid Graphics, and now Stexar.