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Qualcomm on Tuesday said that it has acquired certain graphics and multimedia technology assets, intellectual property and resources that were formerly the basis of AMD’s handheld business. The acquisition enhances Qualcomm’s multimedia capabilities as well as intellectual property portfolio while further limiting AMD’s own product portfolio to processors and graphics chips.

“This acquisition of assets from AMD’s handheld business brings us strong multimedia technologies, including graphics cores that we have been licensing for several years. Bringing this technology in-house creates even greater synergy as we seamlessly integrate the best-in-class multimedia performance AMD offers into our system-on-chip (SoC) products,” said Steve Mollenkopf, executive vice president of Qualcomm and president of Qualcomm CDMA Technologies.

Under the terms of the agreement, Qualcomm has extended offers of employment to various design and development teams from AMD’s handheld business.  The teams are developing technologies to enhance mobile devices in areas including 2D and 3D graphics, audio/video, display, and architecture. 

The two companies signed and closed a binding agreement on January 19, 2009, having already received required regulatory approvals.  Cash consideration from Qualcomm to AMD, as part of the transaction, is $65 million, subject to adjustments for employee-related expenses and a holdback for certain customary indemnification obligations.  Both AMD and Qualcomm are committed to a seamless transfer of business assets, as well as a smooth transition for employees.

ATI Xilleon DTV processors and ATI Imageon handheld graphics chips once brought $135 million in revenues to ATI Technologies per quarter, but under AMD's management, sales of those products drastically decreased.

Qualcomm expects the acquisition to be approximately $0.02 dilutive to pro forma earnings per share in fiscal 2009 and accretive to earnings by the second half of calendar year 2010.

“With the sale of these handheld technology assets and resources to Qualcomm, we are better able to focus on our core business and leverage our unique position as a leader in both x86 computing and high-end graphics,” said Robert J. Rivet, chief operations and administrative officer as well as chief financial officer of AMD. “We believe the talented AMD Handheld employees will be a great asset to Qualcomm.”

Tags: AMD, Qualcomm, Imageon, ATI

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