The furor of rumors regarding IBM’s potential buyout or merger with AMD is once again making headlines.

There has been a buzz for the past week about rumors that have been circulating over a possible merger or buyout of AMD by IBM. While at first it appeared the rumors were largely unsubstantiated, more and more information is flowing in that adds credibility. AMD stocks spiked last week when rumor fever was at its highest, only to die down a few hours later. Neither IBM nor AMD have spoken up to discount the rumors, something that usually happens when errant speculation comes up.

This is not the first time this same rumor or a variant of it has been brought up. AMD merger speculation arose last year after the company reported huge losses each quarter. Despite the persistence of these rumors, many analysts claim the chances of it happening are extremely low. This would make sense, considering IBM in recent years has been moving away from the hardware market in order to refocus on software solutions for businesses. There are certainly no financial limitations preventing IBM from making a move for AMD, as the company reported $91.4 billion in revenue for the 05-06 fiscal year. IBM is currently the largest and most profitable computer company in the world, a standing that perhaps played a role in the creation of its nickname, Big Blue. IBM is also a global leader in supercomputers, taking the top spot again in 2007 with an update to Blue Gene/L at the Lawrence Livermore National Laboratory. The company also has a stake in each of major video game consoles, as they are the provider of the processors for the Nintendo Wii, Playstation 3, and Xbox 360.

If IBM were to acquire AMD, it would have to compete directly with Intel in the consumer hardware market, as well as compete with the likes of Sun Microsystems on the server end. There would also be conflict between IBM and AMD’s current server-class processor customers. We doubt that this buyout will ever happen, but if it does, wow.

Source: X-bit Labs

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