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AMD expects sizable write-down for declining value of ATI purchase

The chipmaker will take a hit in the fourth quarter over the not-so-lustrous intangible assets that accompanied its $5.4 billion buyout of ATI Technologies.

Advanced Micro Devices said Wednesday it expects in the fourth quarter to take a sizable write-down for the declining value of intangible assets related to its $5.4 billion acquisition of graphics chipmaker ATI Technologies.

AMD, in a Securities and Exchange Commission filing, said it doesn't yet know the exact size of the write-down but expects it to be "material"--or in other words, substantial--when it concludes its review.

The chipmaker said it's planning to write off the value it assigned to the ATI acquisition that was above the actual value of ATI's assets, otherwise known as "goodwill" in accounting jargon. That's because AMD has since found the value of these intangible assets has declined since it recorded the ATI acquisition on its books last year.

"This conclusion was reached based on the results of an updated long-term financial outlook for the businesses of the former ATI Technologies Inc., as part of the company's strategic planning cycle conducted annually during the fourth quarter," AMD said in its SEC filing.

The chipmaker further noted that while it expects the noncash impairment charge will be material, it has not yet determined the amount, or range of amounts, for the impairment charge. Once it does, it expects to issue an update to its SEC filing within four business days.

Two other questions remain, however. What did AMD find in its review of ATI's businesses that has impaired the intangible value of the company it acquired? And how will Wall Street react when the company holds its analyst day Thursday?