X-Bit Labs prints rumour of AMD buyout.
I guess this article from X-Bit labs isn't exactly shocking, but still momentous if true.
"Advanced Micro Devices May Be Acquired – ****yst.
AMD Faces Possible Buyout by Private Equity Group
by Anton Shilov
[ 02/15/2007 | 11:58 PM ]
Advanced Micro Devices, one of the world’s Top 10 suppliers of semiconductors who sells microprocessors, graphics processors, chipsets and chips for various consumer electronics, may be acquired by a private equity group, according to a market rumour. The current position of AMD is pretty hard: its microprocessors are facing tough competition by Intel Corp., while its graphics chip group struggles to release its new product.
“We were surprised to see AMD shares rally yesterday given what we believe to be increasing concerns about cash flow at the company. When we polled clients as to the reason behind the strength we were told that private equity rumors were circulating,” ****yst Doug Freedman of American Technology Research wrote in a report on Thursday, EETimes web-site reports.
Private equity groups made two notable acquisitions of semiconductor firms last year: a consortium of investors bought Philips Semiconductor in August, whereas another group of investors acquired Freescale in September. Both semiconductor companies had bright prospects in various industries and it is undeniable that the need for chips will continue to grow rapidly in the future, which may mean that private equities may be looking forward other semiconductor firms as well.
“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,” Mr. Freedman wrote in his report.
The times for AMD are pretty tough these days, still, it does not mean there is no way out.
The company lost $574 million on sales of $1.77 billion in the fourth quarter of its fiscal 2006. AMD has to decrease pricing of its desktop and server processors to sustain its market share under the pressure of Intel’s processors based on the Core 2 micro-architecture that outperform AMD’s offerings in a number of benchmarks. AMD’s next-generation code-named K8L microprocessors will emerge in mid-2007 and shortly after may face serious competition from Intel’s revamped Core 2 chips with higher clock-speeds. ATI, AMD’s graphics products group, is trying hard to release its DirectX 10-supporting code-named R600 graphics processing unit and a family of its derivatives in order to regain market share.
On the other hand, AMD’s losses in Q4 include ATI acquisition related charges of 550 million. The company is ramping up manufacturing using 65nm process technology, which allows it to make them more cost-efficient and decrease pricing without sacrificing margins. The company continues to gain market share in desktop and mobile segments and hopes to recapture its positions in the server market with new quad-core chips. In addition, the firm plans to launch 45nm process technology online in mid-2008 and present its Fusion processors that combine x86 and graphics processors in 2009. Still, in order to accomplish all its goals, AMD may need additional cash.
Officials for AMD did not comment on the news-story."
Well I had a look and about a year ago, stocks for AMD were at about 45 bucks and have steadily declined to about 14 bucks on friday. Hmmm.. possibly a good time to buy some?
Depends on if you're going long term.
New release isn't slated until late spring early summer, so there probably won't be a lot of movement (upwards anywise....) until then.
Here's a commentary on stock prospects for AMD from the Associated Press
The author recommends staying away for now.
"NEW YORK (AP) - Chip maker Advanced Micro Devices Inc. may need to raise cash in about six months, according to a Wall Street ****yst.
American Technology Research ****yst Doug Freedman, who has a "Sell" rating on the stock, said he has increasing concerns about the company's cash flow.
The ****yst noted there are rumors in the market about interest by private equity firms in AMD.
"When we polled clients as to the reason behind (the strength in the stock in Wednesday's trading) we were told that private equity rumors were circulating," Freedman wrote in a note to investors. While we do not doubt that private equity is sitting on cash ... we have a hard time seeing how it would get involved in AMD at the present valuation."
Shares of AMD closed up 2.4 percent at $14.95 in Wednesday's trading.
Freedman also speculated that Michael Dell's recent return to Dell Inc. as chief executive may not bode well for AMD, since he has a strong relationship with chip maker Intel Corp.
"We advise investors to limit their exposure to AMD shares until cash is raised and new product benchmarks are made available," Freedman added.
An AMD spokesperson declined comment.
The company recorded a loss of $166 million for 2006 due to charges related to the acquisition of graphics chip maker ATI Technologies AMD ended the year with $1.54 billion in cash and cash equivalents, down from $1.8 billion at the end of 2005.
Over the last 52 weeks, the stock is down roughly 63 percent, reflecting concerns about an ongoing price was with larger rival Intel.
Shares of AMD were down 11 cents at $14.84 in afternoon trading on the New York Stock Exchange.
© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed."
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