Advanced Micro Devices, Inc. to Offer $1.8 Billion of Conver

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I wonder if this would be an opportunity for Microsoft to step in with a couple billion. IMO, they've got alot riding on AMD's survival.
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How'd you come to that conclusion? I am curious.

There is a possibility they could use AMD/ATI for their next gen console... hmm. Interesting.

Well i'm of the opinion that Intel is aligning itself with Apple and NV. Call it a gut feeling I guess, as well as some indications of it around the web. Given the huge critisism MS has been recieving (especially recently with Vista), and that just seems to me to be the way things are lining up. Also microsoft invested a huge amount of money in their 64 bit OS' to which Intel isn't all that interested in supporting, and I just think a little more populariy in OSX and Intel would back it wholeheartedly.
And most importantly, DX10. They need a healthy dose of competition for the Gaming for Windows initiative, and ATI is a major player in that. I believe more than anything they need R600 to flourish. The thing that is stalling Vista adoption the most is the lack of DX10 games. Once they start to ship, I think Vista will start to catch on with enthusiasts. The current problem is that not very many are happy with NV's midrange and affordable DX10 capable cards, and it's starting to look like AMD has a real winner here. IMO

Well M$ always gets flack for their OS, no matter what it is. This is a recurring theme. They have to design an OS to work on 85%+ of the market, so the bugs are bound to creep up. I am not saying Vista doesn't have issues, because it does, but overall it works fairly well for an initial release with a complete rewrite of the kernel.

Related to 64 bit, it is a tough push. To be honest, I wasn't around for the 16 bit to 32 bit change over, so I can only guess that it was a tough road to get started because you have to not only sell the idea to consumers, but to software designers, hardware builders and then it all actually has to work. Is 64 bit necessary? Yes, if only to break the 4GB limit for now, but in time we will need it. I have no idea when, but I'd say with in the next 5 years you will see it gain real traction, so while Intel may not really care... it still has to make sure their chips work well with it.

The reason OSX has done so well is because it is so simple. Honestly, it is a noobs best friend, bar none. However, it doesn't have the power Windows does. It doesn't have the power to be a server/desktop/ws/tweaker friendly and easy to use all in one. Also, gaming blows, you just can't do it and don't even get me started on the freakin 1 button mouse/laptop clicker, it is retarded. Yes it is easily solvable but still very annoying. OSX has some great features, but until I see a more fundamental shift towards gaming/enthusiasts I will never use it.

Related to DX10, it is hurting Vista and it is hurting ATI for now. The games are coming, the hardware is close at hand, they just need to push it down to the mass market level which won't be easy until generation 2 of the DX10 cards hit. You are right, NV doesn't have great offering in the midrange right now, hopefully ATI can fill the gap. Time will tell.


All very true. I have to believe that Intel and the former ATI are not anywhere near as collaborative as they once were (if that term can be used for the Intel/ATI relationship). At the same time there are reports of a wide range of NV chipsets comming for the Intel platform, as well as reports of many NV software engineers moving to Intel's graphics division for their attempt in discrete. I think something is going on behind the scenes there that hasn't been revealed yet.

As for Vista popularity, times have changed drammaticaly since XP's release in 2002. The most significant is this. This is the most relevant piece of information that companies need to focus on to prosper, IMO.

http://video.gearlive.com/video/article/155-edwards-scoble-pirillo-broback-blog-marketing/

Then take a browse on Digg's technology section, and have a look at the overwhelming majority of anti-Vista/pro-OSX articles. I believe it is having a serious impact on popular opinion in a way that never happened 5 years ago. I sense change is on the minds of alot of people, who fail to see the reprocussions in this particular case. I hope i'm wrong though, because Vista is leaps ahead of OSX and even XP as far as i'm concerned. MS may have caught a bit of a break with Leopard being delayed.

The timing here is crucial for both AMD and Microsoft I believe. A while ago (I think close to 6 months now), NV announced an initiative to bring windows quality games to OSX. I'm not sure how credible those reports are, but given how close ATI and Microsoft were/are, it would make sense.
 
Might this $2.2 billion offer be(related to) the reason for the 3 week NDA at Tunisia.

If so, how does the NDA benefit AMD/ATI(or DAAMIT as some prefer)?
 
Might this $2.2 billion offer be(related to) the reason for the 3 week NDA at Tunisia.

If so, how does the NDA benefit AMD/ATI(or DAAMIT as some prefer)?
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It is possible, but I bet the QIB's get access to the benchmarks because QIB's are typically huge companies and are likely to have someone at Tunisia. So, I don't know if it is a big deal.

on the other hand,

The NDA could be directly related to Tunisia but that wouldn't bode well for AMD's public image. Think about it, they are having to gag reporters on their new product so they can get their private placement debt secured? Makes it look like AMD has 0 chance at beating Intel.

I don't know which is true.
 
The timing here is crucial for both AMD and Microsoft I believe. A while ago (I think close to 6 months now), NV announced an initiative to bring windows quality games to OSX. I'm not sure how credible those reports are, but given how close ATI and Microsoft were/are, it would make sense.
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I think M$ needs to get SP1 out asap in order to head off OSX's gains, but I doubt it is that critical a time.

ATI is in a different boat.

I doubt gaming is coming to the Mac... just too much effort for software companies, but with the switch to Intel it becomes plausible. I don't know what will happen.

You make interesting points worth considering.
 
Oddly enough that's probably true. I say oddly because I don't see where sp1 is really even necessary at this point in time, but will give the perseption of something better. What was true for XP isn't true for Vista IMO. I do see many saying the same thing all over the net though. Maybe it's just my hardware, but i've had absolutely zero issues running Vista thus far with any of my hardware, and my system is dated by about 3 years. Hell, my 7 year old printer which would not function correctly on XP, had full functionality and no issure on Vista. Without Vista drivers no less!

But anyway, yeah, I think Microsoft would be a good fit here for capitol, to both parties.
 
Oddly enough that's probably true. I say oddly because I don't see where sp1 is really even necessary at this point in time, but will give the perseption of something better. What was true for XP isn't true for Vista IMO. I do see many saying the same thing all over the net though. Maybe it's just my hardware, but i've had absolutely zero issues running Vista thus far with any of my hardware, and my system is dated by about 3 years. Hell, my 7 year old printer which would not function correctly on XP, had full functionality and no issure on Vista. Without Vista drivers no less!

But anyway, yeah, I think Microsoft would be a good fit here for capitol, to both parties.
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I ran my system as hard as I could on Beta 2 Vista and it still worked quite well, even gamed on it a good bit. My problem was I couldn't use clockgen on it... big whoop lol. My HP laptop (Vista Home Prem) is absolutely wonderful except for the battery %... yeah that can't seem to stay accurate, but that is it. If that is my only problem... I call it a successful OS, for me. I am tired of people bitching about drivers (not you). There are hundreds of millions of accessories for Windows... but maybe 1M for macs, not everything is cross platform compatible (of course this changed kinda with the move to intel hardwre) so it is much easier for Mac to include drivers as compared to windows. Plus, when did downloading hurt anyone.... get over it lol.

Back on topic.... nah it's after midnight, hijacking threads is allowed.
 
Ok, one more further OT post. :lol:

It appears some just don't understand the complexity of an OS that supports 80-85% of the worlds PC hardware. Sure it's easy when you have closed system such as Apple's, but open it up and try to claim the same. Some people don't know how good they've got it until it's gone I guess!
Also, what I find ridiculous is the virtual silence of the web on Steve Jobs' (IOW Apple's) alledged stock options backdating. Proven or not, if this had been Bill Gates or MS, the masses would have called for a guillatine and a head or two to role.

Ok, no more OT for me. 😀
 
I have a question for you SuperFly.

Now, I am the first to admit that I realy don't have much of a clue when it comes to economics. But I am curious if I am seeing this correctly.

AMD is taking on a lot more debt, a large portion of which is going directly towards an existing loan. The remaining portion is.... I assume..... simply to allow them to make it another quarter or two while continueing the losses.

Wouldn't a company only do this for 1 of 2 reasons? Either A) they are so sure that they are going to come back strong that it is worth the ridiculousness of the whole thing... (a sure thing, if you will. Or B) They know that they are screwed and are pretty much making a desperation move... becasue "hey, why not? what is the worst that can happen?"

I mean, if they go bankrupt, what would the difference be to them? Wouldn't this additional debt be meaningless if they go bankrupt?

Thanks in advance
 
With the amount of debt they are taking on, I just don't see how they can make it to 09. At least not as the same company that they are today.
 
Maybe, but if Barcelona numbers are very good, it may entice those that have been waiting, to go AM2 now to take advantage of cheap chips and motherboards, and then upgrade to Kuma when it arrives. It's not such a bad idea.
 
I realize that the server space is very profitable, but AMD is losing market share. Unless K10 is WAY better, they can't honestly expect much more than a slow turn around in market share. A slow turn around to me means that they won't be turning 600 million dollar loss quarters into 600 million dollar gains any time soon. Maybe instead of 600, they only lose 2 or 300 million per quarter. Paying what little money they make back to MS to pay off the loans.

It sounds like K10 will only be slightly better than Intels current offerings and it isn't looking good for them outclassing Penryn. So again, I just don't see the quick turn around.

Who knows. I am just glad I don't work for them, I would be very nervous about my future employment.
 
I think this is called "borrowing from Peter to pay Paul."

Perhaps the worst part about it is that this kinda takes the steam out of the rumors of a cash infusion from private equity.

Each time AMD's stock has risen in value the last three months, it's been on rumors of PE, LBO or merger. Last week, Silver Lakes Partners was supposed to be interested in 25 percent stake, and AMD's shares ended the day's trading about .60 higher than the previous close.

But each time, the rumors were dispelled after a few days, and the stock quickly coughed up its gains and continued on its year-long downward slide.

Given the recent trend, I wouldn't be surprised if AMD shares slipped down to ~ $12.00 before the week is ove since the only thing, in my opinion, that kept the stock prices up was all the talk of a buyout etc. With that out of the way, investors will be forced to focus on the financials, which are pretty grim.
 
Ok, first of all - this offer is aweful. Just terrible.
🙁

They may offer up to $2.2B in debt (actually its $1.8B with the option to go up to 2.2B), but the net proceeds for operations are going to be a FRACTION of that. I'd be surprised if they net $900MM to actually use in the business. That's about 2 quarters worth of cash burn...

They've leveraged themselves to the hilt to survive 2 more quarters.

Also, if AMDs credit rating falls any further, there are going to be consequences to daily cash flow (e.g. vendors demanding advance payment and tightening collections with AMDs account).
 
Ok, first of all - this offer is aweful. Just terrible.
🙁

They may offer up to $2.2B in debt (actually its $1.8B with the option to go up to 2.2B), but the net proceeds for operations are going to be a FRACTION of that. I'd be surprised if they net $900MM to actually use in the business. That's about 2 quarters worth of cash burn...

They've leveraged themselves to the hilt to survive 2 more quarters.

Also, if AMDs credit rating falls any further, there are going to be consequences to daily cash flow (e.g. vendors demanding advance payment and tightening collections with AMDs account).
Click to expand...

AMD Shares are selling like mad this morning but prices haven't cratered yet. Aren't they still required to shell out 50% of the proceeds of this deal to MS under the ATI loan covenants which would put the yield well under that $.9B.
 
Ok, first of all - this offer is aweful. Just terrible.
🙁

They may offer up to $2.2B in debt (actually its $1.8B with the option to go up to 2.2B), but the net proceeds for operations are going to be a FRACTION of that. I'd be surprised if they net $900MM to actually use in the business. That's about 2 quarters worth of cash burn...

They've leveraged themselves to the hilt to survive 2 more quarters.

Also, if AMDs credit rating falls any further, there are going to be consequences to daily cash flow (e.g. vendors demanding advance payment and tightening collections with AMDs account).
Click to expand...

AMD Shares are selling like mad this morning but prices haven't cratered yet. Aren't they still required to shell out 50% of the proceeds of this deal to MS under the ATI loan covenants which would put the yield well under that $.9B.

Somehow, they mentioned only needing to pay $500MM back. Not sure how that was agreed upon and/or the backroom deal.
 
Perhaps the worst part about it is that this kinda takes the steam out of the rumors of a cash infusion from private equity.

Each time AMD's stock has risen in value the last three months, it's been on rumors of PE, LBO or merger. Last week, Silver Lakes Partners was supposed to be interested in 25 percent stake, and AMD's shares ended the day's trading about .60 higher than the previous close.
Click to expand...

Under Rule 144A the buyer of the private placement debt (which this 1.8B is) has to be a Qualified Institutional Buyer (QIB), now without going into the details of defining everyone who qualifies as a QIB, just know that it includes PE firms of sufficient size.

I wouldn't be surprised if this debt goes to a PE firm because of its convertibility feature. I assuming it is placed with a PE firm, this basically puts AMD management under a real nasty microscope (even more so than they are now) because in a moments notice the PE firm can convert their debt into stock and all of a sudden become a 20-25% stakeholder in the company (depending on the strike price/number of shares the debt can be converted into). After becoming such a large stakeholder they have alot of power with regards as to what AMD management would be doing.
 
Ok, first of all - this offer is aweful. Just terrible.
🙁

They may offer up to $2.2B in debt (actually its $1.8B with the option to go up to 2.2B), but the net proceeds for operations are going to be a FRACTION of that. I'd be surprised if they net $900MM to actually use in the business. That's about 2 quarters worth of cash burn...

They've leveraged themselves to the hilt to survive 2 more quarters.

Also, if AMDs credit rating falls any further, there are going to be consequences to daily cash flow (e.g. vendors demanding advance payment and tightening collections with AMDs account).
Click to expand...

AMD Shares are selling like mad this morning but prices haven't cratered yet. Aren't they still required to shell out 50% of the proceeds of this deal to MS under the ATI loan covenants which would put the yield well under that $.9B.

Somehow, they mentioned only needing to pay $500MM back. Not sure how that was agreed upon and/or the backroom deal.

I bet they got a waiver from MS to violate the debt agreement, which isn't surprising I figured they would. I am ballparking around ~800m in useable cash for AMD out of this deal, which is kind of short sighted, but that is the game they have to play now... survive until Barcelona. With chips that were originally near $1000 now fetching $280 (ballpark) it is no wonder they are having issues, to say the least.
 
I have a question for you SuperFly.

Now, I am the first to admit that I realy don't have much of a clue when it comes to economics. But I am curious if I am seeing this correctly.

AMD is taking on a lot more debt, a large portion of which is going directly towards an existing loan. The remaining portion is.... I assume..... simply to allow them to make it another quarter or two while continueing the losses.
Click to expand...

Word on the Street is about 500M will go towards that debt (I would put it closer to 600M).


Wouldn't a company only do this for 1 of 2 reasons? Either A) they are so sure that they are going to come back strong that it is worth the ridiculousness of the whole thing... (a sure thing, if you will. Or B) They know that they are screwed and are pretty much making a desperation move... becasue "hey, why not? what is the worst that can happen?"
Click to expand...

The second option isn't viable in today's market in such a highly publicized sector. Bankers are very smart people, they don't loan money they don't expect to get back. Are they always right? Nope, but they do a pretty damn good job.

I mean, if they go bankrupt, what would the difference be to them? Wouldn't this additional debt be meaningless if they go bankrupt?

Thanks in advance
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Well you are assuming they file for Chapter 7 bankruptcy (liquidation), the problem with that is, if anything, they will file Chapter 11 (reorganization) which will allow them the protection of the court and it will give them time to restructure their business, shed some high interest debt in favor of low interest deb (hopefully) and just give AMD the time they need to get some crap out the door. Do I expect them to file for it soon? No, if they can make it through 2007 w/o having to go the way of Ch 11, I think they can survive. What they will turn into, as a company, by the end of the year... that I am not as certain about.
 
Then twiddle I shall. I've got all the time in the world.
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Last I looked, AMD was selling at 14.32, which could well change by the time this is finished being written, much less read. If I were you, I'd sell and get out of it. The gamble's way too high. Yes, you might hold and get a few more dollars, but its more likely that holding will end up looking at the bottom of the shoe that's stepping on you.

Ok, that's my opinion and with what its worth, you can take it and a couple dollars and buy some coffee. But I wouldn't twiddle my thumbs or think I have all the time in the world. AMD is just too volatile at the moment.
 
Then twiddle I shall. I've got all the time in the world.
Click to expand...

Last I looked, AMD was selling at 14.32, which could well change by the time this is finished being written, much less read. If I were you, I'd sell and get out of it. The gamble's way too high. Yes, you might hold and get a few more dollars, but its more likely that holding will end up looking at the bottom of the shoe that's stepping on you.

Ok, that's my opinion and with what its worth, you can take it and a couple dollars and buy some coffee. But I wouldn't twiddle my thumbs or think I have all the time in the world. AMD is just too volatile at the moment.

It was up to 14.51 backing down to 14.41 last I looked but the volume of shares is outrageous they are on track to trade more shares today than they do in an average week just under 80M shares today.

Price is up today on not really good news. Maybe there was a leak on the Barcelona scores to a few well heeled investors.
 
Then twiddle I shall. I've got all the time in the world.
Click to expand...

Last I looked, AMD was selling at 14.32, which could well change by the time this is finished being written, much less read. If I were you, I'd sell and get out of it. The gamble's way too high. Yes, you might hold and get a few more dollars, but its more likely that holding will end up looking at the bottom of the shoe that's stepping on you.

Ok, that's my opinion and with what its worth, you can take it and a couple dollars and buy some coffee. But I wouldn't twiddle my thumbs or think I have all the time in the world. AMD is just too volatile at the moment.

No one will argue that AMD isn't volatile, but I wouldn't get out. AMD's stock is headed towrds 12.50 a share before it rebounds (possibly), their stock is down over 50% in the past 12 months. Why would you get out at the trough? Obviously I don't know what Ninja's situation is, but if it is his only stock (highly doubt that) then that changes things. I really don't expect it to dive too much more, after the NDA is up, R600 gets out the door, it will likely level off. The last thing that needs to happen is a panic sell off. There is a sell off going on, but there are buyers pickin up everything that is being put on the market. You are right to notice that the volume is significanly higher than usual, this was expected given what is going on. In no way is it a surprise, but what is a suprise is how much AMD is actually up today. 😀
 
This is in line with their bet the company strategy. Cash wise they have 2 quarters to go (at current loss rate) before they are in trouble. If they can raise 900 million, they have another quarter and a half, maybe two quarters. That gives Barcy and R600 a full year to get out and get traction. That's not bad, actually. The products have to be dynamite. AMD literally cannot afford more delays or poor products.
 
The price is what I had in mind. The last I saw, the price was 14.50, which I think would be a good selling price if the stock, especially if the price sinks to 12.50, at which point it might be good to buy into. I believe Ninja bought in when the stock was in the mid 13's, but not sure on that. No, I wouldn't want to sell at the bottom of the trough. I like to buy at the bottom and then ride it up a bit and then sell.

As to the R600, that may be good or may be a bust. I think AMD is being too quiet about it and has put off its release too long. It could well be a good card, enough to beat the 8800. But if Nividia releases an even better 8900 at the same time, it could be another product that's too little, too late. Wish I had a good working crystal ball so that I'd know what to buy, sell, or short on the stocks.
 
I was impressed that AMD managed to price its Bonds at only 6%. That's not nearly as bad as I expected. I strongly believe that Morgan Stanley has decided that it would be in its interest to support the stock and the company, at least for the present, but they won't throw good money after bad forever. The way things were going, AMD was 4 or 5 months from C11. This gives them time, probably through the end of the year or so, before they will need to raise yet more cash. By then it should be clear whether a K10 generated turnaround is in the cards.

AMD has dodged the current crisis and has been given enough time to have a chance to execute with Barcelona. That's all they could have possibly hoped for in their current situation. A buyout, unlikely to begin with, is even more unlikely than before given its higher debt levels and soon to be negative net tangible assets. Noone is going to come save AMD now, it must execute. If Barcelona is not all that, then it really will be the end for AMD.
 
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