Contact: Brenon Daly
Qualcomm’s recent pickup of graphics and multimedia assets cast off by Advanced Micro Devices continued a trend toward divestitures by major technology companies. Nokia, Verisign, Rackable Systems and Symantec, among others, all sold parts of their business in 2008. And, more specific to the chip industry, AMD’s rival Intel has done more selling than buying over the past three years. (For the record, AMD sold technology to Qualcomm that the wireless company had licensed for several years. Qualcomm will hand over $65m for the unit.)
We expect that more companies will look to sell off segments in 2009, as Wall Street increases the pressure on them to focus on their core business. (We have noted in the past that Symantec, which will have a change at the chief executive spot in April, is a prime candidate for further divestitures.) In 2008, spending on divested business units accounted for some 11% of all M&A activity. That’s up from just 7% in 2007. We wouldn’t be surprised at all to see divestiture spending remain in the double digits in 2009.