Hey, look what we bought!
Next on a list of poor decisions was AMD's purchase of ATi. Now, this decision did make sense; it was just very poorly timed. At the time of the purchase AMD was not flush with money. They had to borrow quite a bit and paid much more than ATi was realistically worth. This overspending put a serious hurting on AMD's ability to produce CPUs, upgrade processes and even research new products.
But all was not bad with this move. After the flop that was the 2900, AMD dropped the 3xxx and 4xxx series cards on us. Both of these were price performance leaders and brought DX10 and 10.1 to the market with them (granted, NVIDIA was first with DX10 support). But the sale put AMD into the red for almost three full years. It was not until the settlement with Intel that they posted a profit in the last quarter of 2009.
Still, after three years of loss and the splitting up of AMD's FAB assets, they are in the black and pushing out some of the best GPUs you can buy. That is if you are interested in gaming. For GPGPU computing they have some work to do, but that is for another article.
To make matters worse (well, better for AMD), AMD has these GPUs available at a much lower cost than their NVIDIA counterparts. AMD is also ahead on GPU process (unlike the CPUs) with almost a full year on NVIDIA at 40nm. So, while the buy was poorly timed and AMD paid way too much, in the end it has worked out very nicely and is the most profitable portion of AMD today.