AMD has completed its acquisition of SeaMicro as part of its strategy to regain lost server market share from Intel and better position itself against future competition from ARM - based players such as Nvidia .
competition
amd complete acquisition seamicro strategy regain lose server market share intel well position future competition arm base player nvidia
AMD has completed its acquisition of SeaMicro as part of its strategy to regain lost server market share from Intel and better position itself against future <m> competition </m> from ARM - based players such as Nvidia .
http : / / www . forbes . com / sites / greatspeculations / 2012 / 03 / 27 / amd - completes - seamicro - acquisition - headed - to - 9 /
3 / 27 / 2012 @ 10 : 05AM
AMD Completes SeaMicro Acquisition Headed to $9
AMD has completed its acquisition of SeaMicro as part of its strategy to regain lost server market share from Intel and better position itself against future <m> competition </m> from ARM - based players such as Nvidia .
We previously wrote on how AMD can benefit from this acquisition ( see AMD Picks up SeaMicro to Strengthen Server Market Offering ) .
Here we take a brief look at the price that AMD paid for SeaMicro , and what this implies about its growth expectations .
AMD shelled out $334 million for the acquisition of SeaMicro .
Since SeaMicro ’ s revenues or other financials were not disclosed , it becomes difficult to gauge whether the price paid was cheap or steep .
However , based on certain assumptions , it is possible to understand the range of AMD ’ s growth expectations from SeaMicro .
For the purpose of calculations , we assume that SeaMicro operates at EBITDA margin of close to 25% and apply similar corporate expenses ( as % of revenues ) including taxes , capital expenditures and others that we apply for AMD .
If we assume SeaMicro ’ s revenues for 2012 will be somewhere around $50 million , it implies that AMD expects SeaMicro ’ s revenues to grow at an average annual rate of 43% to 44% over the course of our forecast period , which extends till 2018 .
These revenues include both SeaMicro ’ s revenues as well as incremental benefit in server - related revenues from the acquisition .
On the other hand , if we assume SeaMicro ’ s revenues for 2012 to be of the order of $150 million , it implies that AMD ’ s growth expectation for SeaMicro and related incremental server revenues stands at somewhere around 16% to 17% .
According to AMD ’ s own calculations , it has paid a handsome price for the acquisition .
Our price estimate for AMD stands at $9 . 21 , implying a premium of little under 15% to the market price .