AMD Seeking Up To $2.2 Billion From Investors - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance

AMD Seeking Up To $2.2 Billion From Investors

In addition to covering its losses, AMD also expects to use some of the money for general corporate purposes, such as working capital and capital expenditures.

Advanced Micro Devices, which reported last week a first-quarter loss of $611 million, is seeking up to $2.2 billion from institutional investors to help pay for its loan in buying ATI Technologies, and to cover general corporate expenses.

AMD said Tuesday it is offering $2 billion in convertible notes that would be due in 2015. In addition, the company is granting initial buyers a 30-day option to buy up to $200 million of additional notes to cover over-allotments. Interest on the notes would be paid semiannually on May 1 and Nov. 1 at a rate of 6% per year.

If AMD sells the maximum amount of notes, it expects net proceeds of $2.17 billion. At least $500 million would be used to repay a portion of the ATI loan the company has with Morgan Stanley Senior Funding. AMD paid $5.4 billion last year for the graphics chipmaker.

AMD also expects to use some of the money for general corporate purposes, such as working capital and capital expenditures. As of the end of the first quarter, the company had a $1.2 billion cash reserve, which is $600 million above the company-set minimum.

However, the chip business is expensive. Capital expenditures in the first quarter were $586 million, and the company expects that number to climb to $2 billion by the end of the year.

Following a year of climbing revenue and market share, AMD in the first quarter felt the competitive heat from a re-energized Intel. In addition to reporting a loss, AMD also posted a drop in revenue to $1.23 billion from $1.33 billion the same period last year.

The poor performance was due to "significantly lower" shipments of microprocessors, a drop in average selling prices, and the inclusion of ATI operations, which generally have lower-margin products, for the entire quarter, AMD said.

The dismal financial statement prompted financial analyst Chris Caso of FBR to say in a report that the company was within two quarters of running out of cash.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Slideshows
IT Leadership: 10 Ways to Unleash Enterprise Innovation
Lisa Morgan, Freelance Writer,  6/8/2021
Commentary
Preparing for the Upcoming Quantum Computing Revolution
John Edwards, Technology Journalist & Author,  6/3/2021
News
How SolarWinds Changed Cybersecurity Leadership's Priorities
Jessica Davis, Senior Editor, Enterprise Apps,  5/26/2021
Register for InformationWeek Newsletters
Video
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll