Is the end imminent for AMD?

SpeedFreak · 22 Oct 2012 at 00:36

eddyr said:
All you have is the sum of the shares. It might be common becasue it is quick but alone is somewhat meaningless it needs greater context. It's market cap is simply based on speculation, the very act of purchasing shares alters its price as market responds to the demand.
Someone interested in buying the company, or an forming objective estimation of a companies worth for example would use alternate methods to value it.

There are a few ways of valuing a company

Market price. In an efficient market the share price should reflect the value of the company. The markets could be deemed efficient in the long term, but mid to short is debatable.

Equity, therefore net assets less net liabilities. This is pretty basic as it only values tangible assets and ignores intangibles such as internally generated IP, staff etc....

Discounting future cash flows. Look at the cash that is expected to be generated over a period of time discounted to reflect that money in one year is more certain than money in ten years. Sum this and get and you get a valuation.

None of these are wrong and for AMD purchasing ATI I imagine that there were synergies through restructuring that would have seemed mutually beneficial at the time. These need to be factoring in at the time of acquisition to determine the offer. I haven't looked in detail but it seems that owning ATI has kept AMD afloat, although feel free to correct me.

555BUK · 22 Oct 2012 at 10:09

The $1.3bn cash pile AMD are sitting on is borrowed money. From what I can see they have $3bn of debt that must be payed during Q2 2015, with a further 5-6bn payable during 2017 and 2022. AMD's creditors/investors will not allow all of that £1.3bn cash pile to eaten up, otherwise they will see abolutely no return should the company fold.

humbug · 22 Oct 2012 at 15:34

555BUK said:
The $1.3bn cash pile AMD are sitting on is borrowed money. From what I can see they have $3bn of debt that must be payed during Q2 2015, with a further 5-6bn payable during 2017 and 2022. AMD's creditors/investors will not allow all of that £1.3bn cash pile to eaten up, otherwise they will see abolutely no return should the company fold.

Where did that come from?

Most of it is cash and some of it sits in unused assets, They now have $2.04bn debt total, their past and current balance sheets includes paying that off.

555BUK · 22 Oct 2012 at 16:59

humbug said:
Where did that come from?

Most of it is cash and some of it sits in unused assets, They now have $2.04bn debt total, their past and current balance sheets includes paying that off.

Here.

humbug · 22 Oct 2012 at 17:11

555BUK said:
Here.

Where it says "amount outstanding" must be a reference to AMD's original debt, which would be right, they have spent the last few years paying it down with 4 more payments of roughly $500m to go.

"Total Debt (mrq): 2.04B"

El_MUERkO · 14 Nov 2012 at 14:58

AMD hires bank to explore options

Could mean massive changes to the desktop PC market. If AMD bow out of making x86 chips Intel become a monopoly. Could make for major changes in the desktop market.

delta0 · 14 Nov 2012 at 15:26

The bold moves made in the gfx card market need to be repeated in the CPU market. I have not considered owning an AMD cpu since the Athlon XP days which was the last processor I owned by them. Their graphics cards are truly awesome though.

Rroff · 15 Nov 2012 at 00:31

El_MUERkO said:
AMD hires bank to explore options

Could mean massive changes to the desktop PC market. If AMD bow out of making x86 chips Intel become a monopoly. Could make for major changes in the desktop market.

AFAIK the possibilities of a sale, etc. or breaking the company up are sensationalised headlines from what I can make out they seem to be looking at options for managing the short term of the company.

bru · 15 Nov 2012 at 14:17

Rroff said:
AFAIK the possibilities of a sale, etc. or breaking the company up are sensationalised headlines from what I can make out they seem to be looking at options for managing the short term of the company.

Totally agree, it is far from the end of AMD (oh no don't buy an AMD card as there will be no warranty in 18months time :rolleyes:

) but of course the sheer fact of hiring one of the worlds leading financial services firms does in itself ring alarm bells.

MAK360 · 15 Nov 2012 at 15:03

It has already been proven that this news was false (AMD denied it and said we are going full steam ahead). This isn't the first time its happened either.

Whats surprising is Reuters and others who published this story have still not updated their articles.

Rroff · 15 Nov 2012 at 16:12

MAK360 said:
It has already been proven that this news was false (AMD denied it and said we are going full steam ahead). This isn't the first time its happened either.

Whats surprising is Reuters and others who published this story have still not updated their articles.

AFAIK it wasn't proved this news was false, what was proved was that AMD were not looking at options for breaking the company up or a managed administration at this time.

Unfortunatly the original quote seems to have been pulled from all the news sources and replaced with:

"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.

The original AMD statement appeared to confirm they had dealt with JP Morgan (and others) to look at near future management options, but denied they were looking at breaking the company up, but it seems to have been pulled for the above soundbite.

MAK360 · 16 Nov 2012 at 01:09

Rroff said:
snip...

Within the past couple of hours, a major media outlet wrote a piece speculating about the sale of AMD. As you know, articles such as this periodically surface in the media. I want you to know exactly how we are responding to this speculative piece, as we expect some additional media outlets to inquire. Our official response is below, along with the original news article.

But let me personally reinforce to you: we are not actively pursuing the sale of AMD or any of our significant assets. It's full steam ahead with our strategy … we absolutely are on the right path.

Rory

http://www.theverge.com/2012/11/13/3642344/amd-rory-read-sale-rumors

Rroff · 16 Nov 2012 at 16:40

Yeah as I said theres no denial there of who they may or may not have talked to only that they aren't looking at the sale of the company either in part or whole.

kitch9 · 19 Nov 2012 at 10:32

Rroff said:
Yeah as I said theres no denial there of who they may or may not have talked to only that they aren't looking at the sale of the company either in part or whole.

News at 11, massive businesses talk to people about "stuff."

MrMarvelous · 19 Nov 2012 at 10:59

I would have thought they've got the PS4 and the new XBox to fall back on Shirley?

mmj_uk · 19 Nov 2012 at 11:10

So what did they go the bank for then? advice on designing a new processor?

They must need financial help at the very least surely?

Yaayuh! · 19 Nov 2012 at 11:20

MrMarvelous said:
I would have thought they've got the PS4 and the new XBox to fall back on Shirley?

That's what i would've thought, given the rumours n'all.

And don't call me Shirley.

bluebox · 19 Nov 2012 at 12:48

One reason they might be talking to someone like DB or Barclays is the euro. It could be as simple as looking at ways to sort out currency fluctuations.
Big companies get advice from bankers all the time.

MrMarvelous · 19 Nov 2012 at 15:39

Rossi~ said:
And don't call me Shirley.

Haha!

Chrisoldinho · 19 Nov 2012 at 22:24

interesting thread, as an AMD fan boy I would be sad to watch them go...