Did AMD Pay Too Much for ATI?

AMD did themselves no favors when they shelled out a staggering $5.6 billion for ATI last year, considering they were already dealing with financial woes. It took a while for things to shape up, but ATI is beginning to look like a wise purchase. But was $5.6 billion too much? Apparently AMD believes it was, which they acknowledged yesterday.

Part of the reason for the high price was that $3.2 billion of it was allocation for goodwill – three times the value of the product technology that ATI had at the time. Well, there is not much AMD can do about the money now, except to constantly improve products and slowly earn it back. All AMD can hope for is that ATI’s next-gen product will be enough to take the crown from NVIDIA.

AMD’s final purchase price for ATI included a $3.2 billion allocation for goodwill, nearly three times the value of product technology that ATI had already developed and was working on in its laboratories, according to AMD’s regulatory filings. AMD bought ATI to bolster the graphics capabilities of its chips and add valuable “chipset” technologies to its product lineup. Chipsets are responsible for sending data from the microprocessor to the rest of the computer.

Source: Yahoo! News