AMD asks to double common stock to 1.5 billion shares

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Last year, and the year before,and the year before, IBM focused on software companies. They have bought many software security companies, and it all ties in to what they do with their core busineses. I doubt AMD is a target for them, as the companies they tend to buy, are all "safe" purchases, without alot of competition, and who mainly cater to business clients anyway, which is IBMs main focus, the business customer, not the home user.
 
Every merger is essentially an acquisition... semantics.
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This is a very....very....very...very long shot.

And I am very....very....very...very much scared and highly.....highly.....highly impressed by the big names you threw out.

Jeez. If Harward says so and if you don't have time to let your humble servants - usselves - know what it says, don't you worry your majesty. We'll live.

Whatever dude... I'm not about to scan the copyright protected article and post it online. This isn't cnnmoney.com... it's a subscription service. Much different in terms how they will enforce copyrights.

What's the long shot? Why do you think I'm trying to scare you? You seem a little confused.
 
hm,yall gotta chill with the flameing. Tiger,you are wrong and righ, its that easy, amd opened down 3%, in may, when the shareholders vote to approve the stock isue,we shall se how much of each. Vern, chill...
Ummm,anyone have any idea how many companys IBM and Intel bought to get where they are? Im sure it numbers in the hundreds. Surely the number of failed mergers must be les then 80%
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A few bombed aquisitions/mergers I can think of off the cusp...

IBM + Lotus... enough said
HP + PwC consulting... enough said

There are a few companies that certainly do beat the odds... they have strong M&A departments. This was an aggregate study of many M&As.
 
Every merger is essentially an acquisition... semantics.
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This is a very....very....very...very long shot.

And I am very....very....very...very much scared and highly.....highly.....highly impressed by the big names you threw out.

Jeez. If Harward says so and if you don't have time to let your humble servants - usselves - know what it says, don't you worry your majesty. We'll live.

Whatever dude... I'm not about to scan the copyright protected article and post it online. This isn't cnnmoney.com... it's a subscription service. Much different in terms how they will enforce copyrights.

What's the long shot? Why do you think I'm trying to scare you? You seem a little confused.
Actually I am confused but no worries, I'll recover. The long shot thing is your comment which I quoted, like every merger is an acquisition.
 
Hi TS,

i'll be nicer, don't want to offend anyone :wink:
unfortunately this is not true all the time, although it is generally true.
a company has to do an anlysis on its cost of capital versus the cost of debt. True debt, tends to be cheaper but it really depends on what kind of debt... revolving credit, term loans, high-yield all have different rates. the problem of cost of capital is compunded by instruments like convertibles which have aspects of both.
so, equity is not always the most expensive form of capital raising. you also need to look at the future expectations... what is cheaper now could be more expensive later and vice versa.

i agree with your points for 1 & 2 as i siad back on like page 5 or so :) but there are many other business factors as well

people often view debt as "bad." not saying that you are thinking this...btw, but some people do. debt is a legitiate part of the capital structure. how much debt is acceptable is hugely dependant upon the industry and relative risk
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yes, it's the Weighted Average Cost of Capital (WACC) that we're discussing here (for all you finance guys at home).

AMD stockholders should hope that they raise some debt... even at 10-15% interest rate, it would be cheaper than issuing stock for a high growth company.

Maybe they can't raise any bonds above B level (that's optimistic)... so it could quickly have a much higher cost.

The bottom line, yes I fully agree, debt is generally a good thing for stockholders when used effectively. Just as long as the additional leverage doesn't sink the cashflow of the business.

My main point is that, if AMD's senior management believed a silver lining was coming this year... they would get short term financing (debt) instead of issuing more stock.

It's clear that they are in survival mode - at least that's what they are indicating to the market.
 
Here have a beer and mellow out,we apparently have flaming lips abounding within the thread;Dont respond it validates the dissention they cause.
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Maybe ask for his phone number. You can protect him better when you are closer....

Does everyone have a custodian here or are you the only wise one?
 
Actually I am confused but no worries, I'll recover. The long shot thing is your comment which I quoted, like every merger is an acquisition.
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Ok, no sweat. True mergers are extremely rare. Mostly the term "merger" is relegated to a PR machine to help stockholders, customers, and employees deal with the takeover (hostile or friendly).

There is almost aways a dominant company in the "merger".
 
Actually I am confused but no worries, I'll recover. The long shot thing is your comment which I quoted, like every merger is an acquisition.
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Ok, no sweat. True mergers are extremely rare. Mostly the term "merger" is relegated to a PR machine to help stockholders, customers, and employees deal with the takeover (hostile or friendly).

There is almost aways a dominant company in the "merger".
Damn! You did it.... You responded.... Your dad will be upset now...
 
This predevaluation from rampant selling from the filing notice fears will actually be advatageous to some during the vista boost if it ever arrives.
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Well, it looks like I sold too soon, as the AMD stock has risen back up this morning. First time in my life that I have to label myself as a panic seller. Well, I'm out of it for now and don't intend to risk anything on it again unless it goes way down. My nerves just aren't steady enough.
 
I'll be a doom sayer. I don't think AMD has hit bottom yet. You are always going to get some bargain hunters after a stock has taken a big hit. Those bargain hunters (buyers) will tend to artifically cause a small bounce back in the stock price when it has hit a low point (like its 52 week low). I'm willing to bet that that AMDs stock trend will continue to go downward until some of its fundamentals look better. Large institutional investors don't know about dielectric gates and why 45 nm is better than 60 nm. What they do know is what a good P/E ration and price/bookshare values look like. With high negative P/E ratio (-86.50), a high Debt/Equity ration (.66), negative income (-166 million), and a negative net profit margin, AMD won't be looking to good to many institutional investors.

I'll think about buying later on when prices reach single digits, but only if I think the company will survive. If the company looks like it will surive or be taken over, share prices could go up very nicely. I can wait out the peaks and valleys as long as AMD is on the long road to recovery and the prices will go up eventually. If Bankruptcy starts to look more likely, I'll stay away from the stock.

Rob
 
Thanks :wink: You had some compelling arguments that made me second guess my initial assessment of the SEC filing. I thought there was a 35% chance I would be coming back here to say "Jack I was wrong..." I am glad that it went this way, if it had gone the other AMD would be much sicker than I thought. And who wants to live in a world with only one consumer CPU company? Not I!
 
Thanks for the info.
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Interestingly, all the news today from the finanicals were about the warn, and not a peep about the SEC filing...

The dip today is likely more a small affect of the warn and a general down market anyway....

@bunkgoats -- well, I guess the dilution wasn't much news at all... or it was sufficiently buried that it did not swing things today, I am a bit suprised but good job on the post.

Jack


Wall Street only really thinks short term. The revenue miss is "more real" at this point than the increase in authorized shares. Some of you were talking like AMD's share price would be cut in half soon due to the doubling in authorized shares. Some points:

1. The increase in authorized shares has to be voted on. This has not happened yet.

2. Authorizing shares is not the same thing as selling them. Doubling the number of authorized shares means that AMD *could* double the shares outstanding if it wanted, but does not mean that it will. Any authorized shares not sold remain as non-voting treasury stock and do not become outstanding. Outstanding shares are the ones that have voting rights, receive dividends, and are used to calculate P/E, etc.

3. Even if they do sell all the new authorized shares this does not necessarily mean 2:1 dilution. In the short term, AMD receives cash for the shares which increases the company's book value. The change in the price/book ratio depends on the new share sale price, which depends on the future outlook of AMD, and the current share price, and the number of shares being sold (they won't sell them all at once). If I were them, I'd sell some shares right after Barcelona. In the long term the cash raised allows AMD to potentially improve their business, in theory, which would increase earnings above what they would have been without the sale of stock. So earnings theoretically are not diluted 2:1 over the long run. This depends entirely on what management does with the money.



EDIT: whups, lance covered this already. sorry for the spam.
 
3. Even if they do sell all the new authorized shares this does not necessarily mean 2:1 dilution. In the short term, AMD receives cash for the shares which increases the company's book value. The change in the price/book ratio depends on the new share sale price, which depends on the future outlook of AMD, and the current share price, and the number of shares being sold (they won't sell them all at once). If I were them, I'd sell some shares right after Barcelona. In the long term the cash raised allows AMD to potentially improve their business, in theory, which would increase earnings above what they would have been without the sale of stock. So earnings theoretically are not diluted 2:1 over the long run. This depends entirely on what management does with the money.



EDIT: whups, lance covered this already. sorry for the spam.
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If they need the $$$$ for new & exciting capex opportunities, then it can create long term value .

If they are using it just to pay the bills, not good. They are basically diluting the company to avoid bankruptcy - they are not creating assets that will generate future cash flows.

However, dilution is preferable to bankruptcy... given no other alternatives.
 
Thanks :wink: You had some compelling arguments that made me second guess my initial assessment of the SEC filing. I thought there was a 35% chance I would be coming back here to say "Jack I was wrong..." I am glad that it went this way, if it had gone the other AMD would be much sicker than I thought. And who wants to live in a world with only one consumer CPU company? Not I!
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A thought occurred to me that perhaps some of the shares will remain inactive until needed in the future.Which to me would be wise.That and at the right time the shares would be worth more,when gfx comes out we may see another dollar on the stocks.Maybe more.

You are exactly right the dilution request is to raise the limit of shares ALLOWED not necessarily how many are issued. They aren't going to dump the whole load on the market the stock would literally tank from over supply and they wouldn't get any working capital for all the stock pushed into the market.
 
Its a double edged sword even at that,
As they will likely control stock values from climbing beyond (?)
after the value hits (?)
depending on sales from vista and gfx,and chipsets to float until august for barcelona when the stock will begin climbing again and through the sales earnings will be kept at (?) in stock until enough new stock is sold to make the capital to move forward.
But if any snags come they will be larger than mondays because of new stock,which is probably why they put barcelona into august.

Its a duct taped piece of engineering at best,but it could work.Essentially In this scenario they use new stock to bolster GPM,and gearup for new releases;If done right it could actually aid stock performance;But thats one hell of a longshot.
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They start releasing stock to limit the rise in share price and the investors are likely to run for the hills faster than you can blink. What investor is going to hang onto a stock that will never increase in value due to share dilution but may drop in value due to market forces!! Imagine sombody's broker trying to peddle this stuff "We have this great stock with no dividends and no upside potential and it maintains unlimited risk how many shares can I put you down for?"...."er..um..None"

This is a desperate and expensive move to raise cash for their required fab investment and writeoff's of the ATI aquisition. It means they cannot get a loan for capital improvements nor have they found private equity financing.

Actually the additional shares will have a stabilizing effect on prices as each share dollar represents a smaller company percentage. The immediate effect is that shares stabilize at a lower value than prior to the dilution even though the cash may not have been used. The analogy is if you have $20 in your pocket it's guaranteed to be worth $20 to you but if you give it to someone else who promises to pay you back it's not worth $20 because you don't actually know you will get it back.
 
The analogy is if you have $20 in your pocket it's guaranteed to be worth $20 to you but if you give it to someone else who promises to pay you back it's not worth $20 because you don't actually know you will get it back.
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Actually, your example reminded me of Wimpy from the old Popeye cartoon. He always said he would pay the money back, the second Tuesday of next week. Better the $20 stays in my pocket.
 
amd is going to bottom in the next few days or weeks - buy iit - you will make a killing.

i bet they get $18 to $22 a share. The dilution is trying to raise the value.
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I have 10 grand sitting in a brokerage account waiting for AMD to bottom out. I know they will come back stronger than ever... of course I have no proof of this.
 
amd is going to bottom in the next few days or weeks - buy iit - you will make a killing.

i bet they get $18 to $22 a share. The dilution is trying to raise the value.
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I have 10 grand sitting in a brokerage account waiting for AMD to bottom out. I know they will come back stronger than ever... of course I have no proof of this.

Open market shares grew by 6 million this week;They have been at 548 million for years.
are you implying institutional dumping?

Yes, I have cash on the side waiting for an entry point if it goes lower... personally, I'm not taking on the risk of this stock unless i can get at least a 3 bagger on it - that puts my entry point at $4-6 (depending on dilution).

Maybe it will never go that low... oh well, plenty of other stocks to invest in.
 
Yes, I have cash on the side waiting for an entry point if it goes lower... personally, I'm not taking on the risk of this stock unless i can get at least a 3 bagger on it - that puts my entry point at $4-6 (depending on dilution).
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I'm in at $12, don't think it will get any lower than that, but what do I know. :wink:
 
No I am saying there are more open market shares now than ever .Up by 6 million shares today. Watch the trend for it during this next 2 months,and see if it doesnt increase 2 million a day or 3 million every 2 days.

I think they are aquiring revenue for releases.
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Maybe they are running out of cash early, estimates were for the well to go dry in july.

You are probably correct because they have to expend cash on capital improvements since the banks aren't floating loans out to them. Interesting to see if they do drop 100 million or so on the market over the next couple of months. With that much more stock out we may hit that magic $10 mark by Barcelona release though I doubt Hector wants to see that.
 
A little info for ya to churn.

http://www.fool.com/investing/high-growth/2007/01/31/the-best-tech-stock-for-2007-amd.aspx
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Been there read that :wink:

Cool, so if you bought the stock after the article... you'd only be down 9%.

j/k :wink:

They said for 2007 and December is a long way away, so when we have to serve you crow how would you like it? 😳
 
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