Linked by timl on Sun 5th Jun 2011 16:25 UTC
Microsoft "Microsoft and Nvidia have an agreement in place that spells out terms relating to a possible acquisition of the graphics and mobile processor manufacturer, regulatory documents indicate. The deal gives Microsoft the exclusive right to match any offer for 30% or more of Nvidia's outstanding shares by a third-party." The agreement appears to be over 10 years old, dating back to the time of the contract for the GPU of the original X-Box. It has likely gained relevance again now that Microsoft allegedly wants to more closely control hardware of tablets running its upcoming Windows 8 OS.
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RE[3]: yeah... no.
by malxau on Sun 5th Jun 2011 20:38 UTC in reply to "RE[2]: yeah... no."
malxau
Member since:
2005-12-04

That filing says nothing remotely related to this news.That was a release about the original XBOX graphics partnership. 10 years ago.

That partnership ended rather badly, given the contractual obligations MS strong armed intel and nvidia into. It is no coincidence the 360 went on to be based on IBM and ATI technologies.


This filing is what the article is referring to. It's in a 2011 10-Q. NVDA still believes the agreement "may" remain enforceable or the provision wouldn't be listed as a current "risk factor" in 2011. It is not relevant that the 360 uses different graphics technology; the issue is merely whether the original agreement remains in force.

Reply Parent Score: 3

RE[4]: yeah... no.
by tylerdurden on Sun 5th Jun 2011 20:56 in reply to "RE[3]: yeah... no."
tylerdurden Member since:
2009-03-17

... and that filing says nothing about any "acquisition" that the article speculates.

It is an old agreement, which companies are supposed to disclose esp. when they involve IP exchange. And given the nature of DirectX development it makes perfect sense, since that is shared MS-NV IP, MS got the right to have a say if a competitor of MS was to buy NVIDIA and thus control that IP.

If anything this filing displays the strong arm negotiation which NVIDIA had to concede in order to supply the graphics chips to MS. Thus, my point that the HW partnership between NVIDIA and MS was less than stellar for NV.

BTW, MS already has their own HW group.

Edited 2011-06-05 21:04 UTC

Reply Parent Score: 4

RE[5]: yeah... no.
by malxau on Sun 5th Jun 2011 22:43 in reply to "RE[4]: yeah... no."
malxau Member since:
2005-12-04

... and that filing says nothing about any "acquisition" that the article speculates.


The 10-Q says, "Under the agreement, if an individual or corporation makes an offer to purchase shares equal to or greater than 30% of the outstanding shares of our common stock, Microsoft may have first and last rights of refusal to purchase the stock. The Microsoft provision and the other factors listed above could also delay or prevent a change in control of NVIDIA."

The article says, "The deal gives Microsoft the exclusive right to match any offer for 30% or more of Nvidia's outstanding shares by a third-party, according to an SEC filing reviewed by InformationWeek...The pact puts Redmond in a position to effectively veto attempts by any of its rivals to snap up Nvidia, which makes key components for the red-hot tablet market. "

This doesn't seem to me like speculation or embellishment. If the 10-Q is accurate, and let's assume it is, InformationWeek's conclusions seem valid.

(The real shock in this news is NVDA's management consider this a 'risk' to its business; given MSFT's history of overpayment in acquisitions, it hardly seems to hurt NVDA materially at all.)

It is an old agreement, which companies are supposed to disclose esp. when they involve IP exchange. And given the nature of DirectX development it makes perfect sense, since that is shared MS-NV IP, MS got the right to have a say if a competitor of MS was to buy NVIDIA and thus control that IP.


I don't disagree with you over the origination or motivation behind the agreement. The issues now are the terms of the agreement and whether those terms remain enforceable.

Reply Parent Score: 3