AMD asks to double common stock to 1.5 billion shares

[mythos]

This IS a move of desperation, and that perception will drive prices even lower than the 50% hit it's already going to take. AMD has not much choice, really, since this is pretty much the only way to a) not be bought out and b) make more cash. Unless they really do have private equity lined in which case the situation becomes even more interesting.

Vern, I'll add in another buck to the pot for your bet No way this is a stock split. Stock splits usually happen because the company perceives that the stock price has gone too high and they want to lower the entry level to buying and selling the stock. There are several other reasons but because, as someone has pointed out, stock splits are zero-sum, they are used mainly for singalling purposes.

Guess we'll see on Monday 😀

 

[gr8mikey]

I agree that its definitely not a split as well. The 10k filing would have listed it specifically as a split. Companies typically only split their stock after a good run up so that the lower share price will attract more buyers.

 

[cxl]

Analysts are going to need to take all their EPS and 1/2 that number, in this regard no big deal except for the psychological effect.

Well, speaking about psychological effect, this means that loss per share will be decreased from 0.34 to 0.17

Mirek

 

[r0x0r]

This is...wow...I wasnt realy expecting this,as recently I have put a rather large sum into buying AMD stock, and loseing half of that means my wife will be a bit mad...ahhh well. I can se several reasons for doing this, and all of them are legal,as the share holders will be required to vote on it, and its totaly legal to give your money away. It will raise alot of money for AMD, who neds it desperatly, it will make a takeover by anyone, though im leaning towards Nvidia on this, much harder sence it spreads ownership around, and in the end, if worse comes to worse, then it lessens the impact of loss, if the company goes bankrupt, although my thoughts on this are that Intel wont allow AMD to disappear unles Nvidia takes there place. As a shareholder, as much as its gunna hurt, and im thinking there aint enough vasaline in the world to make it not, that ill vote for this measure

If Nvidia bought out AMD then they would have to sell off ATi, otherwise they would have a monopoly in the consumer graphics card market.

True?

 

[qcmadness]

If Nvidia bought out AMD then they would have to sell off ATi, otherwise they would have a monopoly in the consumer graphics card market.

True?

I don't think FTC will approve the buyout.

Also, AMD is nearly as large as nVidia. It is too difficult for nVidia to "swallow" AMD

 

[r0x0r]

I thought so.

I honestly can't believe that people think AMD are going anywhere soon just because they haven't got a DX10 8800 equaling/beating card. From what I remember the enthusiasts (i.e. us) make up less than 5% of AMD, Nvidia and Intel's market. (Source: PCPowerplay, Australia's most widely read PC gaming magazine).

I will admit AMD is doing it tougher than anyone would like (except Intel fanboys); it would be folly not to. But they're still competitive in the mid to low range, which is where the majority of sales are.

 

[jackxlj]

we discused this in another thread. I think both IBM<Intel, and private investors would buy ATI, if Nvidia bought out AMD. Also, while AMD is infact a bit larger then Nvidia, AMD has a history of strugleing for cash...Nvidia on the other hand, has never lost cash,they simply go up, even when they released the FX cards, they increased marketshare, and net worth. They have also had two major loans as a company, and both were paid in less then half the time they were given to pay them back. Aa it stands right now, AMDs net value, is very near their net debt, Nvidia could almost trade cash in hand, and buy AMD out of debt. Also, a friend I have, who works as a procesor at BoA, whom issued the startuploan to Nvidia when they incorporated, told me Nvidia has been in talks with them to take a major loan, to the sum of almost 2 thirds of their total net worth, to help them expand into new markets. If you look, Sis,Intel,AMD,via, and Nvidia are all listed as active graphic chip makers. Even if Nvidia didnt spinoff ATI, which would be dumb becouse of the los of cash it would bring, that would still mean, AMD had much les then half of the total graphic market share.
If you look further, Nvidia has been rumored to be designed an x86 chip...only no way to sale it, as they dont have a license. Now they could buy Via...but somehow I doubt they would want Via, if they could have AMD, and the AMD fabs, for just a bit more

 

[bonkers]

from the yahoo message board:


Whenever a company says (in this case AMD):

"Our Board of Directors believes that it is in the best interests of the stockholders"

YOU BETTER RUN AWAY FAST, trouble coming. The light at the end of the tunnel is the light of the locomotive that will run you over.
Will flatten you.

 

[Slobogob]

The good ole Inquirer at it again, interesting move by AMD though, if the story is true. What do you guys think of this move by AMD?


Inquirer --> AMD Shares

Given the recent rumors about a takeover, this looks like someone is desperately trying to prevent that or even playing with a possible aquisitor. It´s an interesting move.

 

[jackxlj]

This doesnt make it easier for AMD to be taken over,unless they plan on breaking AMD up and saleing them off, becouse what this does, is make the diffrent parts od AMD more valueable then the sum of them all togethor.

 

[qcmadness]

This is intuitive.... though hard to imagine at the moment, it would not be illogical.

The Inq floated a rumor that AMD/nVidia were in merger talks prior to the ATI talks/deal. If this were true, then something happened to break those down -- the Inq says it is because nVidia CEO Huang wanted to be the top dog.... frankly, as you point out, this may not have been a bad thing. GPU business is lower margin than CPU, but nVidia has made it possible to be very profitable.

On the flip side, I see nVidia going after an x86 product as being very real. They have one stumbling block to be competitive --- they don't have a fab .... this could change with a buyout of AMD for example. Speculation, but not bad speculation.

But nVidia is only a littie bit larger than AMD 8O

 

[bixplus]

from the yahoo message board:


Whenever a company says (in this case AMD):

"Our Board of Directors believes that it is in the best interests of the stockholders"

YOU BETTER RUN AWAY FAST, trouble coming. The light at the end of the tunnel is the light of the locomotive that will run you over.
Will flatten you.

Wow --- jumped over to the Yahoo boards and skimmed through, they are crucifying AMD over there.....

Funny when it comes to money/financials, it is always to the extremes --either the sky is falling and the world is about to end or it's the sky is the limit and nothing in the world can stop it.

This might be a good time to sell AMD shares and buy Intel. Two reasons why this might be a good idea...Intel is at a really good price right now, and if they deliver a good Q1 earnings report, the stock could jump nicely. Let's face it, everything that Intel has been hammered on by the investors over the last few quarters can only improve this time around...pure speculation though.

 

[bonkers]

http://messages.finance.yahoo.com/mb/AMD

that´s what i call brutality

 

[jackxlj]

AMD was not that much larger then ATI,AMSOUTH was larger then regions, and regions bought them out, a smaller, more aggressive,richer company can purchase a larger one. AMD has had very very few quarters that were profit, look at Nvidias record, plus they have avery good credit rateing, and a very nice record with bank of america. Also Nvidia has almost enough cash on hand, to pay all of AMDs outstanding debts, and if they found someone to buy the ATI division from them at the time of purchase, it would make it even easier...and SiS,Via,Intel, and Matrox all have cash on hand to be able to buy ATI for its value...and all have a reason to do so. Outside of private groups, theres only a few companys that can afford to injest AMD, even fewer could handle AMDs problems ontop of their own, of those that are left, you have Intel, IBM, and Nvidia, Intel would never get approval, IBM can afford to jump into competition with Intel and Nvidia in new markets all at once. On the other hand, you have Nvidia...an aggresive company, it shows solid profits, and a CEO, huang, who is bold,smart, and a leader on the move. He has been pushing Nvidia into new markets at a steady pace, and has yet to lose step. Everyone knows Nvidia wants part of the x86 pie, but cant get Intel and AMD to let them have a peice, Huang has shown before that he isnt scared to take risks if the end justifies the means...but it is inded only speculation,based on rumors

 

[halbhh]

[

Wow --- jumped over to the Yahoo boards and skimmed through, they are crucifying AMD over there.....

Funny when it comes to money/financials, it is always to the extremes --either the sky is falling and the world is about to end or it's the sky is the limit and nothing in the world can stop it.

Exactly right!

And short term trading of stocks is often like a pyramid scheme for exactly that reason. The bet ends when the unlucky last buyers near the top are left holding the bag from the "momentum" stock. It all works exactly the same way inversely in the downward momentum. Some unlucky folks somewhere will sell near the bottom, wherever it is, and will regret that.

This is why anyone who isn't a professional trader should instead follow the principles of Warren Buffett for example, IMO.

I do generally, and also I'm very diverse. Both Intel and AMD together are less than 1.5% of my portfolio back when both where higher. In a way, I'm betting that Paul O. won't be able to maintain a price war without getting the boot, and my time horizon is actually 15 years, during which time I expect a lot of chips to be sold in Asia.

 

[jackxlj]

hmmmm, this is always hard to judge, but Intels board sems to love Mr. Otellini, they are spreading out into new markets, growing, increaseing sales, regaining market share, cutting out old stock, all while showing a decent profit margin. I had the chance to meet Mr. Otellini in January of 03, and even then, he was aglow with his vision of Intel. He has been with Intel sence the early 70s, he has studied at the right hand of some of the greatest busines minds in the world, and his goal wasnt to outprofit AMD, becouse he said any company 10x the size as its closest competitor can make more, he said his goal was the make Intel a faster paced company, trim it, until they could respond to the curent and future markets quickly, and without a total restructure. His speach to Intel, when he took the helm, said many of the same things. He didnt promise a return to the profits of the early 90s, he promised to make then a new Intel for a new world, and ya know what? Hes done it. Intel is leaner, more agressive, faster to respond, and more efficiant then they have ever been. Even with the price war, they are on an increase across the line, it could be better with higher prices maybe, but all the board is seeing, is profits, less need to floor the market with advertisements, and the income they will soon be getting from the medical section. M. Otellini isnt going anywhere anytime soon, he is what Intel needed, and they know it.

 

[halbhh]

yeah, good points. The CEOs of big companies (S&P500 types) that lost their jobs in the last couple of years even when the company was well run and profitable were said to be kicked out because the stock price went nowhere.

I bet Paul O. has a lot of room to play, but also that he's used up some part of it now. It's the big institutional shareholders that can apply pressure I think.

 

[jackxlj]

I dont think hes done anything but gain ground. Most of the big investors in Intel, are part of Intel, the next largest shareholder outside the board, is BGI, and they are firmly behind M. Otellini. Granted they are in for the long haul, haveing owned their stake of Intel sence the 80s, but they hold the proxt vote of many others, and even more Intel investers listen when they speak. Intel is rare in that the majority of its large shareholders have been with te company for many years,some even decades. They have sen Intel at its early 90s height, to the bottom after the silicone valley boom, and Intel has always survived. Up and down, but they survive and prosper. Unles Otellini messes up by the numbers, he will be at the helm for a while yet, hes a young man, and just aggresive enough to keep Intel on the track he wants

 

[lance525]

Gentlemen:

This is neither a stock split nor dilution of equity. The key phrase in the proxy was "authorization". This means they are asking stockholders to allow the issuance of x number of shares. They could concievably issue them to the existing shareholders, on a 1 to 1 basis and turn this into a stock split. Or they could issue them at a given price (determined by them and the brokerage firms they use to do the offering). Depending on the offering price, this may or may not be dilutive, as the company takes in large quantities of cash that raises shareholder equity, although it still may lower equity/share.

If they choose to hold onto these shares in the corporate treasury, it does nothing to the value of the outstanding shares.

While a doubling of authorized shares is huge, many companies ask for increases in authorized shares to pay for stock options, profit sharing, ESOP's etc.

Therefore, simply authorizing shares does nothing. It's not until they are issued and tradable that they will affect price/share, earnings/share, equity/share and all the other xx/share ratio's investors and analysts use to evaluate value.

I think your speculations, though, are right on the money in that AMD is essentially going to its shareholders "hat in hand" so to speak. At least they are asking!

 

[halbhh]

nice points lance.

 

[jackxlj]

True, but none of us argued otherwise...what we said was, to everyone, this looks like AMD is in trouble. Its the sums that total more then the parts so to speak. If Barcelona was r600 were as great as AMD says,then they wouldnt wait to ramp, they would sale what they have, to bring in cash, they would not plan on eeding such drastic measures. Even if everyone is wrong, and it is nothing major, investors wont see it that way, nor will analysts. If you are right, then AMD is hitting bullets with hammers by doing this at this moment. It would be much better to release a groundbreaking product, and start to earn income, then do it, so people know you have a fighting chance, not delay,and delay, and then do it

 

[halbhh]

Well, perhaps it is their plan to build a new fab in NY state.

 

[sailer]

AMD has been struggleing with cash isues for a long time now...the purchase of ATI made it worse....and the thrashing of k8 by conroe was a sucker punch from right field that they werent expecting...its a formulae for disaster...at the time buying ati was smart..in hindsight it was stupid...i wish i could always see into the future...but im puting nvidia stock on my plans of purchase for monday morning

it wasnt a bad move ,As I have railed for so long ,the planning was seriously flawed and now they propose to TAKE value from common stock.

If its not a split,AMD is a thief.and I lose 2 bucks :lol:

sell before its an official rip off.

Late again on the conversation. Ok, the last couple weeks I've questioned the sanity of the heads of AMD and wondered if the tech departments were smoking some strange stuff. Of course, Baron then questioned why I had bought any stock at all. But in defense, I first bought last fall when teh new cpu and the R600 were supposed ot come out shortly. They didn't, the stock fell, so I bought some more thinking that in a month or two some hardware would finally come out and the stock would go back up enough to recover my losses. Now this.

Since it has to be put to the stockholders for vote, I know where my vote will go, like, no way. Unfortunately, my few shares don't hold a candle to the big shareholders, should they vote for it. If the stock were to split, than I wouldn't care one way or the other, my valuation remains the same.

But I see that all the company heads are dumping their stock holdings. That means they know something they aren't telling, which might pull charges of insider trading. Can anyone spell Enron? Does anyone remember what happened to those in charge of Enron, including the accountants of the company? maybe there is a note of hope here, as I just checked and found that though the officers sold off some stock, their overall holdings are 10 to 30 times as much as what they sold. But they still took options to buy at much lower prices, which means they expect the price to go lower and that still smacks of insider trading.

Like you say Vern, if its a split, it doesn't matter much, if its not, AMD is playing not just theft, but grand larcony. At the moment, I don't know whether to put in a sell order now and take the losses or gamble that the stock will recover and rise. I know I live in Nevada, a gambling state, but this really tests the nerves.

 

[jackxlj]

that fab is part of the problem. Fabs are hugely expensive to make and maintain, and AMD doesnt have that kinda cash right now, they need to cancel until they weather this current storm and come close to paying off the diffrent loans they took out

 

[halbhh]

I've no doubt they have intelligent people working out these scenarios. One thing they decided as I understand was that they could not go long term at below 20% market share, because it was too much of an R&D disadvantage. Of course, alliance with IBM helps enormously, but Intel's advantages had to be reduced at least some. Also, if you have Dell, HP, Lenovo, etc, as customers, and you come out with a good arch, you just have to be able to make enough chips to make it pay off as it should, with scale vs R&D costs.