Advanced Micro Devices Extends Gains On Split-Off Rumor

Advanced Micro Devices, Inc. AMD extended its gains Monday following a report last week that the company may split itself in two or spin off a business.

AMD hired advisors to review options on how a break-up or spin-off might work, according to a report Friday by Reuters.

The company may separate its graphics and licensing business from its server business, which sells processors that power data centers, according to Reuters, although the same report noted that an AMD spokeswoman said no such project was in the works.

AMD changed hands recently at $2.65, up $0.07 or 2.3 percent. Shares are up 14 percent over the past five trading days.

AMD has also been the subject of recent merger speculation, with Northland Capital Markets' Gus Richard suggesting earlier this month that AMD could become a target for Xilinx, Inc. XLNX or for Chinese state-owned investment vehicles, according to a Barron's report.

AMD shares are off about 35 percent in the past 12 months and the company is shifting its focus to gaming consoles and low-power servers to combat falling laptop sales, according to Reuters.

"Investors have decided that AMD has hit the iceberg and they are waiting for the ship to sink," Richard said, according to the Barron's report.

But the company "still has time to avoid the collision, and if all else fails investors will be bailed out by the lifeboat of M&A," Richard said.