United Airlines experiences yet another major computer glitch

A massive computer outage at United Airlines early Thursday stranded passengers across the country.A spokesperson for United tells WGN-TV that the airline is up and running again.

United Airlines, just a week before the year's busiest travel period, experienced yet another major computer problem Thursday morning that delayed hundreds of flights across the country, mostly on the East Coast. Some airline industry observers called for "heads to roll" at the world's largest airline.

The latest glitch involved the dispatch system software that enables Chicago-based United to communicate with airplanes before departure, delivering information on the plane's weight and balance, number of passengers and baggage, said United spokesman Charlie Hobart.

Flights of United's regional jet service, United Express, were not affected.

The outage occurred from about 7:30 to 9:30 a.m. Thursday and resulted in 257 delays directly attributable to the outage and more through the day, along with about 10 cancellations. The airline said it had 636 delays Thursday, far more than its typical number of about 300. The delays affected a relatively small number of the airline's 5,500 daily flights — fewer than 5 percent, Hobart said.

The impact at O'Hare International Airport seemed to be minimal, United and airport officials said.

United has had rampant problems with an unrelated system, its passenger reservation system it switched to in March. In August, the airline had another unrelated network outage that occurred when a piece of communication equipment in a United data center failed and disabled communications with airports and the United website, United.com. That was due to a failure at a United vendor.

The computer problems, especially the reservation system problem that affected flights in midsummer, have had Jeff Smisek, CEO of United's parent company, United Continental Holdings, making public apologies since March. He conceded to Wall Street analysts that operational problems hurt the airline's third-quarter profits as many customers fled to competitors. But he said during an earnings call with analysts in late October that those problems were behind the airline and that he was confident United would perform well during the busy holiday travel season.

Aside from weather-related delays, such as superstorm Sandy and a snowstorm on the East Coast, that seemed true until Thursday's outage. Even on Thursday, United's on-time performance was about 80 percent, meeting its target, a spokesman said.

"It was a software issue that we found and fixed in that two-hour period," United spokesman Rahsaan Johnson said. "It will not happen again."

Hobart said he did not have details about what went wrong.

Joe Brancatelli, a business travel writer at JoeSentMe.com, said the failures point to a larger problem.

Some industry observers said United is out of excuses.

"It is flat-out unacceptable," said Henry Harteveldt, co-founder of Atmosphere Research Group. "This makes United a laughingstock among airlines."

He said airline computer systems are complex and Thursday's problem might be a one-time issue, but the repeated failures are not only embarrassing for United, they "undermine trust in the airline" and "demoralize employees."

"There are clearly failures in the airline's strategy and the airline's execution, and heads need to roll," he said. "United's (chief information officer) should resign or be dismissed."

Hobart said the airline has improved recently.

"Since this summer, we've significantly improved our operational performance, with nearly 85 percent of our flights on time so far this month and nearly 80 percent of flights arriving on time in October, despite operational challenges like Hurricane Sandy," he said. "We understand this outage was frustrating for our customers, and we are enabling them to rebook without penalty and receive a full refund if their flights were delayed by at least two hours."

"Mostly what it says is that (airlines) have got to stop looking at mergers as two route maps you can smash together," Brancatelli said. He contends that the United-Continental merger was not planned properly.

"There are too many things going wrong," he said. Blame rests with "the guys running the show," he said of United's top executives. "The fish stinks from the head."

gkarp@tribune.com

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'Jihad' ads on CTA buses cause controversy

The controversial ads unveiled on the back of 10 CTA buses Wednesday read, “In any war between the civilized man and the savage, support the civilized man.” They conclude with the words, “Support Copts. Defeat Jihad,” referring to friction between Muslims and Coptic Christians in Egypt.

Within hours of the buses' first runs, messages appeared on Facebook and Twitter denouncing the campaign. Many said degrading a spiritual tenet of Islam -- one that refers to a Muslim's personal quest to become a better person -- amounts to hate speech.

“This whole campaign insinuates Muslims are violent,” said Asaf Bar-Tura, programs director for the Jewish Council on Urban Affairs, which protested the ads on social media Wednesday. “If it's within their legal powers, (CTA) should either not put it up because they incite hate and stereotypical thinking or put a label next to each sign saying `The CTA disagrees with this ad.’ ”

So far, federal judges have sided with the advertisement's sponsor, the American Freedom Defense Initiative, which sued transit authorities in New York City and Washington, D.C., when they initially rejected the ads. Those judges ruled that public forums such as buses and trains can't bar advertising entitled to First Amendment protection.

Pamela Geller, executive director of the initiative, said she believes the Jewish Council has good intentions, but denies that her ad qualifies as hate speech.

"There’s nothing hateful about it," she said in an e-mail. "9/11 was hate. 3/11 in Madrid was hate. ... The Christmas underwear bomber was hate. ... Pushing back against such hate is not hate."

"Perhaps this is the strangest thing of all: their utter lack of awareness, or denial, of the barrel pointed straight between their eyes," Geller said. "It is an odd combination of naivete, brainwashing and self-loathing that I will never comprehend."

Although Geller posted on her blog "Atlas Shrugs" a letter from her lawyer threatening legal action against CTA if they didn’t place the ads, Brian Steele, a spokesman for the CTA, denied that the CTA was threatened with a lawsuit. But the precedents did deter the CTA from rejecting the ads, which are expected to run on different routes each day for the next four weeks.

“While those courts agreed that the AFDI ads violate anti-disparagement or anti-demeaning standards similar to CTA's, that violation in and of itself did not remove AFDI's First Amendment protection to place the ads,” Steele said in a statement.

“CTA understands that this ad may be offensive to our customers,” he added. “While the courts have ruled this ad is a form of protected speech under the First Amendment, we object to its divisive message.”

The estimated ad revenue is about $4,500, a spokesman said.

Meanwhile, Ahmed Rehab, the executive director of the Chicago chapter of the Council on American Islamic Relations, said the group expects to launch its own nationwide ad campaign next week. As part of the campaign called “My Jihad,” individual Muslims define what the spiritual concept means for them.

“I don't feel the urge to fight … I'd rather put out the alternative,” Rehab said. “People can decide what racism is.”

mbrachear@tribune.com
Twitter: @TribSeeker

jhilkevitch@tribune.com
Twitter: @jhilkevitch

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Texas Instruments cuts 1,700 jobs, winds down tablet chips

NEW YORK/SAN FRANCISCO (Reuters) - Texas Instruments is eliminating 1,700 jobs, as it winds down its mobile processor business to focus on chips for more profitable markets like cars and home appliances.

Texas Instruments said in September it would halt costly investments in the increasingly competitive smartphone and tablet chip business, leading Wall Street to speculate that part of the company's processor unit, called OMAP, could be sold.

The layoffs are equivalent to nearly 5 percent of the Austin, Texas-based company's global workforce.

"A sale would have been better than a restructuring but a restructuring is certainly better than nothing," Sanford Bernstein analyst Stacy Rasgon said.

TI has been under pressure in mobile processors, where it has lost ground to rival Qualcomm Inc. Leading smartphone makers Apple Inc and Samsung Electronics Co Ltd have been developing their own chips instead of buying them from suppliers like TI.

Instead of competing in phones and tablets, TI wants to sell its OMAP processors in markets that require less investment, like industrial clients like carmakers.

TI is expected to continue selling existing tablet and phone processors for products like Amazon.Com Inc's Kindle tablets for as long as demand remains, but stop developing new chips.

"This year, the Kindle runs on the OMAP 4 and next year's Kindle is slated, we believe, for OMAP 5. We believe that program is well along to completion and do not expect that the termination of OMAP will disrupt those plans," said Longbow Research analyst JoAnne Feeney.

Amazon had reportedly been in talks to buy the mobile part of OMAP.

TI said it expects to take charges of about $325 million related to the job cuts and other cost reduction measures, most of which will be accounted for in the current quarter. Its previously announced financial targets for the fourth quarter do not include these costs, TI said.

The company, which has 35,000 employees around the world, expects annualized savings of about $450 million by the end of 2013 from the action.

TI shares rose to $29 in after-hours trading after closing at $28.76, down 2 percent on Nasdaq.

(Reporting By Sinead Carew in New York and Noel Randewich in San Francisco; editing by Carol Bishopric)

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R.A. Dickey, David Price win Cy Young awards

NEW YORK (AP) — R.A. Dickey languished in the minors for 14 years, bouncing from one team to another before finally perfecting that perplexing knuckleball that made him a major league star.

David Price was the top pick in the draft and an ace by age 25, throwing 98 mph heat with a left arm live enough to make the most hardened scout sing.

Raised only 34 miles apart in central Tennessee, Dickey and Price won baseball's Cy Young awards on Wednesday — one by a wide margin, the other in a tight vote.

Two paths to the pantheon of pitching have rarely been more different.

"Isn't that awesome?" said Dickey, the first knuckleballer to win a Cy Young. "It just shows you there's not just one way to do it, and it gives hope to a lot of people."

Dickey said he jumped up and yelled in excitement, scaring one of his kids, when he saw on television that Price edged Justin Verlander for the American League prize. Both winners are represented by Bo McKinnis, who watched the announcements with Dickey at his home in Nashville, Tenn.

"I guess we can call him Cy agent now," Price quipped on a conference call.

The hard-throwing lefty barely beat out Verlander in balloting by the Baseball Writers' Association of America, preventing the Detroit Tigers' ace from winning consecutive Cy Youngs.

Runner-up two years ago, Price was the pick this time. He received 14 of 28 first-place votes and finished with 153 points to 149 for Verlander, chosen first on 13 ballots.

"It means a lot," Price said. "It's something that I'll always have. It's something that they can't take away from me."

Other than a 1969 tie between Mike Cuellar and Denny McLain, it was the closest race in the history of the AL award.

Rays closer Fernando Rodney got the other first-place vote and came in fifth.

The 38-year-old Dickey was listed first on 27 of 32 National League ballots and totaled 209 points, 113 more than 2011 winner Clayton Kershaw of the Los Angeles Dodgers. Washington lefty Gio Gonzalez finished third.

Cincinnati right-hander Johnny Cueto and Atlanta closer Craig Kimbrel each received a first-place vote, as did Gonzalez. Kershaw had two.

Dickey joined Dwight Gooden (1985) and three-time winner Tom Seaver as the only Mets to win the award. The right-hander went 20-6 with a 2.73 ERA, making him the club's first 20-game winner since Frank Viola in 1990, and became the first major leaguer in 24 years to throw consecutive one-hitters.

Perhaps most impressive, Dickey did it all during a season when the fourth-place Mets finished 74-88.

"It just feels good all over," he said on MLB Network.

Dickey switched from conventional pitcher to full-time knuckleballer in a last-ditch effort to save his career. It took him years to finally master the floating, darting pitch, which he often throws harder (around 80 mph) and with more precision than almost anyone who used it before him.

"I knew what I was going to be up against in some regard when I embraced this pitch," Dickey said.

He was the first cut at Mets spring training in 2010 but earned a spot in the big league rotation later that season and blossomed into a dominant All-Star this year. He led the NL in strikeouts (230), innings (233 2-3), complete games (five) and shutouts (three) — pitching through an abdominal injury most of the way.

"I am not a self-made man by any stretch of the imagination," Dickey said. "The height of this story, it's mind-blowing to me, it really is."

A member of the 1996 U.S. Olympic team and a first-round draft pick out of Tennessee, Dickey was devastated when the Texas Rangers reduced their signing-bonus offer from more than $800,000 to $75,000 after they discovered during a physical that he was missing a major ligament in his pitching elbow.

Undeterred, perseverance got him to the big leagues anyway. When he failed, the knuckleball brought him back.

Among those he thanked ceaselessly for helping him on that long and winding road to success were all his proud knuckleball mentors, including Charlie Hough, Tim Wakefield and Hall of Famer Phil Niekro.

"It brings a real degree of legitimacy I think to the knuckleball fraternity and I'm glad to represent them and I'm certainly grateful to all those guys," Dickey said. "This was a victory for all of us."

Dickey said he received 127 text messages and 35-40 phone calls in the moments immediately following the Cy Young announcement.

The only call he took was from Niekro, a 318-game winner from 1964-87. The first texts Dickey responded to were from Wakefield and Hough.

"Most well-deserved," Niekro said in a comment provided by the Hall of Fame. "I'm super proud of him, as a pitcher and as an individual."

Dickey has one year left on his contract at $5.25 million and New York general manager Sandy Alderson has said signing the pitcher to a multiyear deal is one of his top offseason priorities. Alderson, however, would not rule out trading his unlikely ace.

"I believe the Mets are going to be a lot better and I want to be part of the solution," Dickey said, adding that he hopes the sides can strike a deal and he'd be happy to end his career in New York.

"I want to be loyal to an organization that's given me an opportunity," he said. "At the same time, you don't want to be taken advantage of. I've been on that side of it, too, as a player."

Price went 20-5 to tie Jered Weaver for the American League lead in victories and winning percentage. The 27-year-old lefty had the lowest ERA at 2.56 and finished sixth in strikeouts with 205.

Verlander, also the league MVP a year ago, followed that up by going 17-8 with a 2.64 ERA and pitching the Detroit Tigers to the World Series. He led the majors in strikeouts (239), innings (238 1-3) and complete games (six).

Price tossed 211 innings in 31 starts, while Verlander made 33. One factor that could have swung some votes, however, was this: Price faced stiffer competition in the rugged AL East than Verlander did in the AL Central.

"I guess it's a blessing and a curse at the same time," Price said. "There's not an easy out in the lineups every game. It feels like a postseason game."

The No. 1 pick in the 2007 amateur draft out of Vanderbilt, Price reached the majors the following year and has made three straight All-Star teams.

Despite going 19-6 with a 2.72 ERA in 2010, he finished a distant second in Cy Young voting to Felix Hernandez, who won only 13 games for last-place Seattle but dominated most other statistical categories that year.

The two MVP awards will be announced Thursday. Verlander's teammate, Triple Crown winner Miguel Cabrera, is a leading contender in the American League.

NOTES: The last AL pitcher to win back-to-back Cy Youngs was Boston's Pedro Martinez in 1999 and 2000. San Francisco RHP Tim Lincecum did it in the National League in 2008-09. ... Price and Dickey became the fourth pair of Cy Young winners born in the same state, according to STATS. The others were Jim Lonborg and Mike McCormick in 1967 (California), Viola and Orel Hershiser in 1988 (New York) and Pat Hentgen and John Smoltz in 1996 (Michigan). ... Niekro and his brother, Joe, both finished second in Cy Young voting, as did fellow knuckleballer Wilbur Wood.

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Judge throws out Justin Bieber paparazzo chase case

LOS ANGELES (Reuters) – Criminal charges filed against a photographer who pursued teen pop star Justin Bieber at high speeds on a Los Angeles freeway in July were thrown out on Wednesday, striking a blow to California’s crackdown on overly aggressive paparazzi.

Celebrity photographer Paul Raef was the first person to be prosecuted under the state’s 2010 law that criminalizes dangerous driving when taking photos commercially.

Raef was charged in July with two counts of violating the law stemming from a July 6 incident on a freeway in Los Angeles‘ San Fernando Valley.

Dismissing the charges, Los Angeles Superior Court Judge Thomas Robinson called the state’s anti-paparazzi law “problematic” and “overly inclusive.”

The law “sweeps very widely and would increase the penalties for reckless driving” in unintended cases, Robinson said.

Robinson faulted the law’s vague definition of commercial photography, saying that it could also apply to a photographer who was speeding to reach an arranged photo shoot with Bieber.

Raef could have faced up to a year in prison and $ 3,500 in fines, if convicted. His attorney, Brad Kaiserman, said the law is “about protecting celebrities.”

A message left with Bieber’s publicist requesting comment was not immediately returned.

Raef still faces lesser charges of misdemeanor reckless driving and failing to obey police orders after he allegedly pursued Bieber, 18, at high speeds. He will be tried on those charges at a later date.

Bieber, who was pulled over by police for driving 80 miles per hour in a 65 mph zone, told officers at the time that he was being hounded by paparazzi, and police said they noticed Raef’s car following the “Boyfriend” singer.

About 30 minutes after the traffic stop, Bieber called police to report that Raef continued to follow him. Police later found Raef and other paparazzi together in downtown Los Angeles.

The Canadian singer received a speeding ticket at the time.

(Reporting By Eric Kelsey, editing by Jill Serjeant and Sandra Maler)

Celebrity News Headlines – Yahoo! News

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Booze calories nearly equal soda's for US adults

NEW YORK (AP) — Americans get too many calories from soda. But what about alcohol? It turns out adults get almost as many empty calories from booze as from soft drinks, a government study found.

Soda and other sweetened drinks — the focus of obesity-fighting public health campaigns — are the source of about 6 percent of the calories adults consume, on average. Alcoholic beverages account for about 5 percent, the new study found.

"We've been focusing on sugar-sweetened beverages. This is something new," said Cynthia Ogden, one of the study's authors. She's an epidemiologist with the Centers for Disease Control and Prevention which released its findings Thursday.

The government researchers say the findings deserve attention because, like soda, alcohol contains few nutrients but plenty of calories.

The study is based on interviews with more than 11,000 U.S. adults from 2007 through 2010. Participants were asked extensive questions about what they ate and drank over the previous 24 hours.

The study found:

—On any given day, about one-third of men and one-fifth of women consumed calories from beer, wine or liquor.

—Averaged out to all adults, the average guy drinks 150 calories from alcohol each day, or the equivalent of a can of Budweiser.

—The average woman drinks about 50 calories, or roughly half a glass of wine.

—Men drink mostly beer. For women, there was no clear favorite among alcoholic beverages.

—There was no racial or ethnic difference in average calories consumed from alcoholic beverages. But there was an age difference, with younger adults putting more of it away.

For reference, a 12-ounce can of regular Coca-Cola has 140 calories, slightly less than a same-sized can of regular Bud. A 5-ounce glass of wine is around 100 calories.

In September, New York City approved an unprecedented measure cracking down on giant sodas, those bigger than 16 ounces, or half a liter. It will take effect in March and bans sales of drinks that large at restaurants, cafeterias and concession stands.

Should New York officials now start cracking down on tall-boy beers and monster margaritas?

There are no plans for that, city health department officials said, adding in a statement that while studies show that sugary drinks are "a key driver of the obesity epidemic," alcohol is not.

Health officials should think about enacting policies to limit alcoholic intake, but New York's focus on sodas is appropriate, said Margo Wootan, director of nutrition policy for the Center for Science in the Public Interest, a public health advocacy group.

Soda and sweetened beverages are the bigger problem, especially when it comes to kids — the No. 1 source of calories in the U.S. diet, she said.

"In New York City, it was smart to start with sugary drinks. Let's see how it goes and then think about next steps," she said.

However, she lamented that the Obama administration is planning to exempt alcoholic beverages from proposed federal regulations requiring calorie labeling on restaurant menus.

It could set up a confusing scenario in which, say, a raspberry iced tea may have a calorie count listed, while an alcohol-laden Long Island Iced Tea — with more than four times as many calories — doesn't. "It could give people the wrong idea," she said.

___

Online:

CDC report: http://www.cdc.gov/nchs/

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Erdrich wins National Book Award for fiction

NEW YORK (AP) — The National Book Awards on Wednesday honored both longtime writers and new authors, from Louise Erdrich for "The Round House" to Katherine Boo for her debut work, "Beyond the Beautiful Forevers."

Erdrich, 58, has been a published and highly regarded author for nearly 30 years but had never won a National Book Award until being cited Wednesday for her story, the second of a planned trilogy, about an Ojibwe boy and his quest to avenge his mother's rape. A clearly delighted and surprised Erdrich, who's part Ojibwe, spoke in her tribal tongue and then switched to English as she dedicated her fiction award to "the grace and endurance of native people."

The works of two other winners also centered on young boys — Boo's for nonfiction, and William Alexander's fantasy "Goblin Secrets," for young people's literature. David Ferry won for poetry.

Boo's book, set in a Mumbai slum, is the story of a boy and his harsh and illuminating education in the consequences of crime or perceived crime. The author, a Pulitzer Prize-winning journalist currently on staff with The New Yorker, said she was grateful for the chance to live in a world she "didn't know" and for the chance to tell the stories of those otherwise ignored. She praised a fellow nominee and fellow Pulitzer-winning reporter, the late Anthony Shadid, for also believing in stories of those without fame or power.

Boo was chosen from one of the strongest lists of nonfiction books in memory, from the fourth volume of Robert Caro's Lyndon Johnson series to Shadid's memoir "House of Stone" and Anne Applebaum's "House of Stone." Finalists in fiction, which in recent years favored lesser known writers, included such established names as Dave Eggers and Junot Diaz. Publishers have been concerned that the National Book Awards have become too insular and are considering changes, including expanding the pool of judges beyond writers.

Winners, chosen by panels of their peers, each will receive $10,000.Judges looked through nearly 1,300 books.

Ferry is a year older than one of the night's honorary recipients, Elmore Leonard. Ferry, 88, won for "Bewilderment: New Poems and Translations," a showcase for his versatile style. He fought back tears as he confided that he thought there was a chance for winning because he "was so much older" than the other nominees. Attempting to find poetry in victory, he called the award a "pre-posthumous" honor.

Alexander quoted fellow fantasy writer Ursula K. Le Guin in highlighting the importance of stories for shaping kids' imaginations and making the world a larger place than the one they live in.

"We have to remember that," Alexander said.

The ceremony was hosted by commentator-performer Faith Salie and went smoothly even though Superstorm Sandy badly damaged the offices of the award's organizer, the National Book Foundation, whose staffers had to work with limited telephone and mail access.

Honorary prizes were given to Leonard and New York Times publisher and chairman Arthur O. Sulzberger Jr.

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FCC recommends cross-ownership waivers for Tribune Co.

The staff of the Federal Communications Commission has recommended that the agency grant Tribune Co. waivers of so-called media ownership rules, paving the way for the company to emerge from its long-running bankruptcy.

The waivers -- the last major hurdle in the four-year case -- would take effect Friday as long as none of the five commissioners raise serious objections, according to a person at the FCC who wasn't authorized to speak and therefore did not want to be identified.

No vote is required for the waivers to take effect.

The waivers would set the wheels in motion to emerge from bankruptcy, something that can happen as soon as new ownership, a group led by senior creditors Oaktree Capital Management, Angelo Gordon & Co and JPMorgan Chase & Co., can complete the necessary paperwork.

The FCC staff is recommending that the agency grant a permanent waiver to Tribune's ownership of the Chicago Tribune and WGN radio and television stations and that it give  one-year waivers for the Los Angeles Times ownership of KTLA-TV Channel 5 and for similar arrangements in three other markets.

The FCC also is circulating among commissioners a proposal for new media ownership rules that would ease restrictions on consolidations among newspapers and TV and ratio stations, according to FCC Chairman Julius Genachowski. That proposal is expected to come up for an agency vote at the next regular meeting.

Once the new rules are in effect, Tribune's new owners could seek permanent waivers in the Los Angeles, New York, Hartford, Conn., and South Florida markets.

Tribune Vice President Shaun Sheehan declined to comment.

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Hastert uses government office for private business

A Tribune investigation has found that former U.S. House Speaker Dennis Hastert has used his taxpayer-funded office to conduct private business. Federal law allows former House speakers to maintain a government-financed office for up to five years, but they are not permitted to use the office for financial gain. (Nuccio DiNuzzo, Chicago Tribune / November 14, 2012)

By Katherine Skiba and Todd Lighty




Tribune reporters

11:55 p.m. CST, November 13, 2012

Former U.S. House Speaker J. Dennis Hastert has conducted private business ventures through a little-known government office that has cost taxpayers about $1.8 million, a Tribune investigation has found.

Former House speakers are allowed to maintain a government-financed office for up to five years to wrap up matters relating to their tenure. They are not permitted to use the office for financial gain.

But the Tribune found that a secretary in the ex-speaker’s government office used email to coordinate some of his private business meetings and travel, and conducted research on one proposed venture. A suburban Chicago businessman who was involved in the business ventures with Hastert said he met with Hastert at least three times in the government office to discuss the projects.

Hastert, an Illinois Republican, said he did not misuse the office. “I didn’t work on any private business out of there,” he said.

Court records, interviews and dozens of emails link the Office of the Former Speaker to J. David John, a Burr Ridge businessman who made six of the emails public in a lawsuit in DuPage County. John alleges in his suit that Wheaton College officials and others ruined his business relationship with Hastert, who is not a defendant in the suit.

Read the full story as a digitalPLUS member: Hastert used government office for private business

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Exclusive: AMD hires bank to explore options - sources

NEW YORK/SAN FRANCISCO (Reuters) - Advanced Micro Devices has hired JPMorgan Chase & Co to explore options, which could include a sale, as the chipmaker struggles to find a role in an industry increasingly focused on mobile devices and away from traditional PCs, according to three sources familiar with the situation.

Sources told Reuters on Tuesday that an outright sale of the company is not the main option, and other choices could include a sale of its portfolio of patents.

The company's stock surged 18 percent on the news before ending up 5 percent at $2.09 on the New York Stock Exchange. The shares slipped further to $2.07 in extended trade after AMD said it was "not actively pursuing a sale of the company or significant assets at this time."

"AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly-differentiated technology assets is the right approach to enhance shareholder value," spokesman Drew Prairie said in an email to Reuters.

When asked why AMD had hired JPMorgan, Prairie declined to confirm the engagement, saying the company does not comment on its relationship with investment banks.

A JPMorgan spokeswoman declined to comment.

One of Silicon Valley's oldest chipmakers, AMD is laying off engineers and some analysts are concerned it may not find new markets for its chips in time to reverse a declining cash reserve.

AMD's shares have fallen more than 60 percent this year, giving it a market value of about $1.4 billion. It also has long-term debt and capital lease obligations of about $2 billion.

Since the 1980s, AMD has competed with much larger Intel and at times has made inroads with its PC and server chips. But setbacks at AMD limited those gains and AMD now faces new competition from companies designing low-cost and power-efficient chips based on ARM Holdings' technology.

Like Intel, Sunnyvale, California-based AMD was caught flat-footed in recent years with the emergence and fast growth of mobile devices.

But while Intel has deep pockets to fund research on new products to catch up, AMD faces declining cash flows and a more modest balance sheet.

EMULATE APPLE

Some investors believe part or all of AMD could be bought by a technology company that might want to emulate Apple Inc's tight control of software and components, a strategy credited in part for the success of the iPad and iPhone.

One source described AMD as a "legacy company" and said it might prove difficult to sell because of its dependence on the PC industry and lack of strong mobile offerings.

Another source said AMD's game console chip and embedded chips businesses were growing and attractive.

Microsoft Corp, Google Inc, Samsung Electronics, Intel Corp and even Facebook Inc have been suggested by Wall Street analysts as potential suitors that could benefit from some of AMD's chip business, including its graphics division, PC processors and server chips.

Others say AMD's most valuable asset may be its deep bench of engineers or its patents.

Goldman Sachs analyst James Covello estimated in a recent note to clients the chances of AMD's PC processor business being sold are between 15 percent and 30 percent.

Rather than selling AMD, bankers could help the chipmaker strengthen its finances in order to acquire technology it believes it needs to tackle new markets, said Williams Financial analyst Cody Acree.

"Right now they don't have the currency on their balance sheet or their share price to make an acquisition (of another company) viable," Acree said.

UNDERESTIMATED CHANGE

Rory Read took over as AMD's CEO in 2011 promising to fix long-standing execution problems that have plagued the chipmaker. But AMD has continued to lose money as well as market share to Intel and graphic chip rival Nvidia.

AMD said last month it would slash 15 percent of its workforce, while devoting more resources to areas outside of its traditional PC business, including communications, industrial and gaming applications.

Last week, AMD said it added a second board member from its leading shareholder, Mubadala Development Co, which owns 15 percent of the chipmaker.

In October, Read told analysts on a conference call he had underestimated the speed of change in the PC industry and said AMD would move quickly to focus on selling chips for communications, industrial and gaming applications.

AMD recently announced it has licensed technology from ARM and will use it to build low-power chips for servers. But those products aren't expected to launch until 2014 and AMD is one of several companies vying for a microserver market that will be small compared to traditional servers that power most data centers.

With the company burning through cash, analysts have recently become concerned about future liquidity and say AMD needs to turn its business around sooner than later.

AMD's cash declined $279 million in the third quarter to $1.48 billion. AMD said it was reducing its "optimal" cash target to $1.1 billion from $1.5 billion due to the business' now smaller size.

(Reporting by Nadia Damouni and Noel Randewich; Editing by Paritosh Bansal, Gary Hill and Bernard Orr)

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