AMD finally made their bid for Xilinx official yesterday to the confusion of the financial world. SemiAccurate was a little apathetic about the merger until something clicked, then we were a lot more positive.
At first our thoughts on the matter were the same mild confusion with echoes of the AMD/ATI merger, something which this author was the first to leak. (Note: The Inquirer where that story was published went under so the best link I can find is here) If you were being charitable you could describe that merger as initially fraught with problems but one that eventually bore the intended fruit. Some might question those eventual results but SemiAccurate’s view is that the initial vision was correct but management at the time wasn’t up to the task.
Step forward 14 years and those echoes still linger even though AMD’s management has become world class in most ways. The biggest change is undoubtedly that people are held responsible for their actions, good or bad, and for lack of a better term, there is real management at the company. This may seem obvious but for the first couple of decades this author followed the company, those traits were in very short supply.
Going back to the AMD/Xilinx deal, our initial thoughts centered around the lack of product overlap, that Xilinx was strong in many hard to enter markets that AMD covets, and the fact that it was an all stock deal. There was nothing to jump out and scream to us that this deal needed to be done and nothing to scream that it should not be done. It was as close to neutral from a technical and business sense as we could possibly imagine. In several conversations over the last few days we described it as, ‘meh’.
What we felt this deal hinged on was quite simple, integration. If it went smoothly, the rosy picture of additive virtues put forth by management was quite possible. If it went the AMD/ATI route and distracted management, led to competing fiefdoms, and all the rest, well you know how that went for AMD. Given that we now describe AMD’s management as ‘adult’ for the first time, we are willing to give them the benefit of the doubt and say this deal will almost assuredly go smoothly.
Even with a smooth integration and happy workers singing the company song almost perfectly like some fantasy scene from a musical, but not as perfectly as the white robed Apple employees of course, there was still no compelling reason why this should happen. Like we said, meh, but a meh with more upside potential than downside. Then a light bulb went on and SemiAccurate realized why this AMD/Xilinx merger is not only a good thing but a very good thing borne from foresight and proactively filling in large holes in critical bits of the company that aren’t pain points yet.
Note: The following is analysis for professional level subscribers only.
Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.
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