AMD faces cash crunch and LBO, says analyst

[PeteS in CA]

AMD faces cash crunch and LBO, says analyst
Mark LaPedus
EE Times
(02/15/2007 11:24 AM EST)

SAN JOSE, Calif. - Advanced Micro Devices Inc. (AMD) faces a potential cash crisis amid rumors about a private-equity buyout for the microprocesor maker, according to an analyst. ''We were surprised to see AMD shares rally yesterday given what we believe to be increasing concerns about cash flow at the company,'' analyst Doug Freedman of American Technology Research Inc., in a report on Thursday (Feb. 15). The analyst issued a ''Sell'' on AMD's share with a price target of $12.

''When we polled clients as to the reason behind the strength we were told that private equity rumors were circulating,'' he said in the report. ''While we do not doubt that private equity is sitting on cash it needs to put to work, we have a hard time seeing how it would get involved in AMD at the present valuation.''
...
Recently, AMD reported fourth quarter 2006 revenue of $1.77 billion, an operating loss of $527 million, and a net loss of $574 million, or minus $1.08 per share.

The very substantial operating loss suggests that AMD has been trying to buy market share by selling product at a loss. It's a hazardous strategy.

[pentium]

Re: AMD faces cash crunch and LBO, says analyst

If they screw this up......God help us all.

[Topcat]

Re: AMD faces cash crunch and LBO, says analyst

I hope they don't fail. If it weren't for AMD, Intel would be happy if we were all still running P2 300MHz........... Competition forces progress, without AMD, we are at the mercy of Intel. The same can be said for Microsoft...... MS has no true cometition, hence, we are at the mercy of that bald Nazi Steve Ballmer..... I'd hate to see the processor market fall into the same disaster.

[willawake]

Re: AMD faces cash crunch and LBO, says analyst

umm $500m of the Q4/06 loss can be attributed to charges related to purchase of ATI

wouldnt be the first time a company made themselves a target for buyout after a big acquisition

[gonzo0815]

Re: AMD faces cash crunch and LBO, says analyst

OMG, this are my worst case expectations from AMD`s ATI acquisiton. At least i hope, that they can manage to come around that, AMD managers are used to be in sutch an uncomfortable situation in the past.

Well, a E6300 for 150€ will soon be the past, if AMD realy bites the dust. Back to the days, where any halfway usefull Intel CPU are abouth 300€ and any not that matured & expensive technologies like rambus etc. are pushed to the consumers.
At least the US foreign trade balance will become a littel more balanced ;-)

[pentium]

Re: AMD faces cash crunch and LBO, says analyst

So if AMD goes they will also drag ATI down with them?

PANIC MODE!!!!!!11!1

[willawake]

Re: AMD faces cash crunch and LBO, says analyst

here some more interesting analyst info.

[PeteS in CA]

Re: AMD faces cash crunch and LBO, says analyst

My take on MF's numbers is that the $527M is a continuation and exacerbation of a trend prior to the Q4 acquisition of ATI. The acquisition may or may not have contributed to the operating loss, but seems to have been a big part of why the net loss was larger than the operating loss.