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Advanced Micro Devices Inc. (AMD) has agreed to sell its digital-television business to Broadcom Corp. (BRCM) for $192.8 million as the struggling chip maker moves to streamline itself while it battles chip giant Intel Corp. (INTC).
The deal, set to close by year's end, will make AMD "leaner and more focused while seeking to create a business model to deliver sustainable profitability," said President and Chief Executive Dirk Meyer. He added the sale will bolster AMD's balance sheet and lower the amount of revenue the company needs to generate to break even.
Broadcom said adding AMD's digital-TV efforts with its own will allow the communication-chip maker to offer a complete line of products that covers the entire segment, from low to high end. The company has seen digital TV as a key growth area.
"It was a good move" for AMD, said FTN Midwest analyst Joanne Feeney.
"What they're trying to do is focus on the core businesses," she said, adding that while AMD's Xilleon digital-TV processor was well-regarded, the TV business "was a distraction to them."
Some 530 AMD employees will join Broadcom through the deal.
Meyer became CEO of AMD last week with a formidable challenge of returning the company to profitability after seven consecutive quarterly losses and transforming the way computers process graphics and information.
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