Advanced Micro Devices (NASDAQ:AMD) advanced in morning trades on the heels of a report last week that the he second-largest global supplier of microprocessors may reportedly split itself in two or spin off a business.
Shares gained 2.7 percent to $2.65 at 1:42 p.m. in New York, paring losses over the past year to 36 percent.
AMD hired advisors to review options on how a break-up or spin-off might work, Reuters reported on Friday, citing three people familiar with the matter.
The company may separate its graphics and licensing business from its server business, which sells processors that power data centers, Reuters said, although the same report noted that an AMD spokeswoman said no such project was in the works.
AMD, which has a market capitalization of around $2 billion, has competed with much larger Intel since the 1980s, and at times has made inroads with its PC and server chips.
AMD has an extensive cross-licensing agreement with Intel, an issue AMD would have to study carefully in the case of a break-up.
In the last few years, AMD has been caught somewhat flat-footed by new competitors designing low-cost and power-efficient chips. AMD shares have fallen 40 percent over the last 12 months.
The company, which said in October it would cut 7 percent of its workforce, is now shifting its focus to gaming consoles and low-power servers to combat falling laptop sales.
AMD's net loss widened to $180 million, or $0.23 per share, in the quarter that ended March 28, from $20 million, or $0.03 per share, a year earlier. It also missed on revenue expectations. It is forecasting a return to profitability in the second half of the year.
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, or for Chinese state-owned investment vehicles, according to a Barron's report.