AMD Jumps on Spinoff Buzz

SAN FRANCISCO -- Advanced Micro Devices(AMD Quote) shares were up sharply Tuesday on rumors that the chipmaker is getting closer to unveiling its long-awaited restructuring plan.

The money-losing chip firm has promised investors that details about its new manufacturing strategy are coming, and Wall Street was abuzz in speculation Tuesday that AMD may use its annual shareholder meeting later this week to announce the plan.

According to one sell-side analyst, speaking on condition of anonymity, the rumors have AMD splitting into two separate companies, one with in-house chip manufacturing and the other as a purely chip design-focused firm; or perhaps into three companies, with a third spinoff focusing on graphics chips.

While none of the hypothetical scenarios are particularly new, the rumors may be getting some momentum because of AMD's upcoming shareholder meeting on Thursday.

"It feels like a rumor that's taking off because it has some merit in that we know an announcement is coming at some point," said the analyst, adding that the shareholder meeting nonetheless seemed like an unlikely forum for AMD to announce the news.

Shares of AMD were up 9.2%, or 60 cents, at $7.13 on more than twice the average trading volume mid-Tuesday. The stock is up nearly 20% in the past week.

The stock's run-up also comes as AMD and rival Intel(INTC Quote) exchanged another volley in their ongoing legal battle. On Monday, AMD released a court filing laying out evidence for its allegations that Intel coerced PC makers including Dell(DELL Quote) and Hewlett-Packard(HPQ Quote) to not use AMD chips in their products. Intel filed its own brief rebutting the claims.