AMD overestimated ATI's goodwill

Posted on Wednesday, Dec 12 2007 @ 21:16 CET by Thomas De Maesschalck
AMD said its fourth quarter financial results will be lower than expected because the firm is going to take a sizable write-down for the declining value of intangible assets related to the acquisition of ATI:
AMD, in a Securities and Exchange Commission filing, said it doesn't yet know the exact size of the write-down but expects it to be "material"--or in other words, substantial--when it concludes its review.

The chipmaker said it's planning to write off the value it assigned to the ATI acquisition that was above the actual value of ATI's assets, otherwise known as "goodwill" in accounting jargon. That's because AMD has since found the value of these intangible assets has declined since it recorded the ATI acquisition on its books last year.

"This conclusion was reached based on the results of an updated long-term financial outlook for the businesses of the former ATI Technologies Inc., as part of the company's strategic planning cycle conducted annually during the fourth quarter," AMD said in its SEC filing.

The chipmaker further noted that while it expects the noncash impairment charge will be material, it has not yet determined the amount, or range of amounts, for the impairment charge. Once it does, it expects to issue an update to its SEC filing within four business days.
AMD's stock dropped a bit more than 1% today. At the time of writing AMD's shares were worth $8.97 on the stock market, a far cry from the $22+ a year ago.

Source: CNET

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Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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