Nvidia Buyout Rumors Surface Again

Speculation that Intel is preparing to announce an acquisition of graphics chipmaker Nvidia surfaced again on Wednesday, pushing Nvidia's stock up over 10 percent before it began to fall again Thursday morning. Analysts said an announcement was impending, but it never happened.

Nvidia has looked like a promising target for Intel since its rival AMD acquired ATI in July for $5.4 billion. The merger will allow AMD to offer integrated processor and graphics solutions to its customers. By 2008, AMD plans to introduce new processor configurations that would integrate the CPU and graphics processor into a single unit.

But despite rumors that Intel would trumpet the news Wednesday night, the company has remained silent, only saying it does not comment on market speculation. Still, the anticipation made for a flurry of trading on Wall Street, with Nvidia trading at twice its usual volume, according to market research firm Track Data.

Some analysts remained skeptical that a buyout would take place. Nvidia's market capitalization of over $10 billion makes it an expensive proposition for Intel, requiring the company to pay far more than AMD did for ATI. In addition, unlike AMD, Intel already makes integrated graphics chips.

Satya Chillara, an analyst with Pacific Growth Equities, downgraded Nvidia's stock from "buy" to "neutral" Wednesday. "We believe that the January quarter is not looking strong from a demand perspective, mainly due to concerns of the AMD-ATI bundling once the merger is complete in October," he wrote to investors.