AMD disputes report the company is for sale
Nov 13, 2012 (Menafn - Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) --Advanced Micro Devices Inc. officials on Tuesday disputed news reports that its management is exploring how to sell the company or substantial assets.
"AMD is not actively pursuing a sale of the company or significant assets at this time," the chipmaker said in a written statement. The statement also said company leaders think the right way to enhance shareholder value is "to drive long-term growth by leveraging AMD's highly differentiated technology assets."
A financial analyst who follows the company said he believes AMD did consult with JPMorgan Chase & Co., a big investment banking firm, but that the company might have done so to explore all of its financial options. AMD did not specifically address the report that it consulted with JPMorgan Chase.
AMD's stock price shot upward by 18 percent Tuesday following after the Reuters wire service reported that JPMorgan Chase had been retained to explore whether to sell the company. But the stock closed at 2.09 a share, up 10 cents, for a 5 percent gain.
The story -- and the company's response -- speak to the severity of AMD's predicament.
Although AMD is the second-largest maker of processor chips for the personal computer industry, its sales and earnings have dropped sharply this year as global PC sales have slowed.
The company last month cut 15 percent of its global workforce, about 1,600 people, to cut operating costs. Those job cuts included about 400 workers in Austin, reducing the company's area employment to about 2,000. Although the company's formal headquarters are in Sunnyvale, Calif., Austin is where most of its senior executives live and where much of its engineering work is done.
The company said it expects to save about 210 million by the end of next year from operations as a result of the restructuring. It expects to take a charge against earnings of 80 million this quarter related to the restructuring.
Analyst Cody Acree with Williams Financial Group in Dallas said AMD could have consulted with an investment bank without actually attempting to put itself or significant assets up for sale. Companies consult with investment banks for a variety of reasons that don't necessarily include selling assets.
Selling the company or its assets would involve getting the approval of its largest investor, which is the government of Abu Dhabi, which is an oil-rich emirate located on the Persian Gulf. The company announced last week that it had named a second board member as a representative of Mubadala Development Co., which is an investment arm of the Abu Dhabi government.
Acree noted that the company had just over 1 billion in cash and short-term investments at the end of the latest quarter, but it had used 240 million in cash to pay for its operations.
"Having a bit of cash would provide more flexibility," Acree said.
The chipmaker has lost 710 million through its first nine months of operation this year with revenue totaling 4.3 billion, down 12.5 percent from a year ago. But its revenue slid to less than 1.3 billion in the latest quarter, which was down nearly 25 percent from last year.
"The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD," CEO Rory Read said at the end of the last quarter.
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