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AMD gets further into debt

Spending pocket money too fast
Tue Apr 24 2007, 11:01
COMBINED GPU AND CPU maker DAAMIT has announced that it plans to mortgage itself out for another $1.8 billion dollars in debt.

We've previously reported that the company is running short on cash for the year, despite pledging to make $500m worth of cuts before the year is out. That helps things, but really only stems the tide - the extra money AMD is raising now will help to fund expansion.

Ironically, the new round of money will also contribute towards paying for the purchase of ATI by paying back part of the bank loan the company nabbed to afford the $5bn asking price.

There are still rumours that private equity partners could be amongst those keen to snap up the new debt, with the possibility of turning it into stock. However, the latest round of funding does seem to suggest that an out-and-out purchase of the company is off the table for now.

Whilst many were carping on about the 'death of Intel' last year, there were a significant number of industry watchers looking at AMD and asking - 'Is that it?' The company failed to really take advantage of the 18 months of major technological advantage it had, and is now paying the price for that - a company with as many intelligent people as Intel doesn't stay dumb for long.

AMD is also going to be under pressure to make good on its investment in ATI over the next 18 months, to prove that it hasn't paid top dollar for a turkey. If it can't push out a full range of R600-based products in the next couple of months, things are going to start looking incredibly tenuous for the company.

Meanwhile, if you've got a few hundred million and fancy financing AMD out of its current tight spot, feel free to get on the phone to Hector. µ

 

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