AMD Sees Impairment Charge

The chipmaker lowers the value of ATI's goodwill.
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The bad news keeps flowing at

Advanced Micro Devices

(AMD) - Get Report

.

The company said Wednesday that it will take an impairment charge tied to the goodwill value of ATI Technologies, the Canadian graphics chipmaker it acquired in 2006.

AMD said it has not yet determined how much the charge will amount to, but said it will be material.

The lower valuation of ATI's goodwill is based on an updated long-term financial outlook for the business, AMD said. The company made the determination after its annual strategic planning review.

AMD

acquired ATI for $5.4 billion, as part of an effort to round out its menu of basic chip offerings for PC makers. AMD also wants to use ATI's technology to build a new processor that integrates computing and graphics processing features.

But some investors believe AMD overpaid for ATI and say the acquisition worsened the competitive landscape for the chipmaker. In addition to battling with

Intel

(INTC) - Get Report

, the dominant microprocessor company, AMD now also competes against graphics powerhouse

Nvidia

(NVDA) - Get Report

.

The news of the goodwill charge comes a day before AMD's management is scheduled to meet with Wall Street analysts in New York to present its annual financial strategy and goals.

AMD's stock has been under pressure in recent weeks following the company's disclosure that a bug in its new quad-core microprocessor has caused a delay in the general availability of its Barcelona server chip. The so-called errata also slows the performance of AMD's new desktop chip.

AMD expects to have clean versions of both chips in the first quarter of 2008.

Shares of AMD recently were up 25 cents, or 2.8%, to $9.32 amid a broader market rally.