Advanced Micro Devices, Inc. AMD successfully split its graphics chip business into a separate internal business unit called Radeon Technology Group. This move comes nine years after the company entered the graphics processor business with the ATI buyout.
This structural change will, however, not impact the company’s financials.
Radeon Technology Group will be led by Raja Koduri. He will be promoted to the position of senior VP and chief architect and report to CEO Lisa Su.
Why the Change?
According to Su, the change was made to allow the graphics division to focus on gaming and virtual reality opportunities. However, per Fortune, Advanced Micro appears to be getting ready “for some kind of internal spin out of its graphics business.”
Supporting the move at a press conference, Su stated that with Radeon Technology they plan to put “in place a more agile, vertically-integrated graphics organization focused on solidifying [AMD’s] position as the graphics industry leader, recapturing profitable share across traditional graphics markets, and staking leadership positions in new markets such as virtual and augmented reality.”
Advanced Micro (since the ATI takeover in 2006) has worked hard to combine its GPUs and CPUs, but has only succeeded in game consoles. With this move, it appears that AMD has decided to let the graphics company pursue novel opportunities independently. How this new move affects the company's APUs, which unites a CPU and a GPU on a single die, remains to be seen.
The release, however, did not mention anything about artificial intelligence, the area where AMD’s graphics rival Nvidia (NVDA) is spending a great deal of energy and money. The company also did not mention whether the move was in preparation of a split in AMD’s business that has been rumored for some time.
Advanced Micro reported disappointing second-quarter results with both the top line and the bottom line missing the respective Zacks Consensus Estimate.
Weak consumer PC demand and lower-than-expected notebook sales affected the quarterly results. The company’s computing and graphics side of the business also performed poorly.
AMD has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the industry are Autobytel Inc. ABTL, Blue Nile Inc. NILE and PetMed Express PETS. All the three stocks have a Zacks Rank #2 (Buy).
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