Could this be the end of the beginning or beginning of the end for AMD?

[apoppin]

there IS hope ... imo

http://forums.anandtech.com/messageview...atid=31&threadid=2042740&enterthread=y

 

[Hulk]

Originally posted by: Cookie Monster

Originally posted by: Kur
Man wasn't this discussion happening about a year ago when Intel was getting owned?

It's a back and forth thing, and always will be.

You do realise that AMD lost everything that they gained in... ONE quarter!

Intel getting owned? please, they werent even scratched. AMD should've been more agressive while Intel was down (durign the end of the netburst reign) but i guess their ego got in the way.


That comment about being more aggressive is spot on. Of course hindsight is 20/20 but imagine if AMD had cut X2 prices more when they were on top. People like me would have gone X2 instead of waiting for C2D.

 

[myocardia]

Originally posted by: craftech
And every time you hear of another big merger in the news, instead of shrugging your shoulders you should cringe.

John

I do, then I go download another free distro of Linux. $400 for the Ultra edition.:laugh::laugh::laugh:

 

[lookin4dlz]

Originally posted by: myocardia
...you let your ego start making decisions that you should be letting your frontal lobes handle, it seems.

I agree about AMD's CEO.

 

[Viditor]

Originally posted by: Hulk

Originally posted by: Cookie Monster

Originally posted by: Kur
Man wasn't this discussion happening about a year ago when Intel was getting owned?

It's a back and forth thing, and always will be.

You do realise that AMD lost everything that they gained in... ONE quarter!

Intel getting owned? please, they werent even scratched. AMD should've been more agressive while Intel was down (durign the end of the netburst reign) but i guess their ego got in the way.


That comment about being more aggressive is spot on. Of course hindsight is 20/20 but imagine if AMD had cut X2 prices more when they were on top. People like me would have gone X2 instead of waiting for C2D.

Some corrections there Hulk...

1. The unit marketshare numbers are more illusion than factually demonstrative.
ZDNet article

"But the numbers look worse than usual because AMD was forced to get rid of excess inventory in the fourth quarter, which provided plenty of chips for its customers in the first quarter that they would have otherwise had to buy directly from AMD during the quarter, McCarron said. Throw out the inventory problems and AMD's market share still declined, but probably only by 2 percentage points or so, he said"
Of course you also have to correct from Q4, but it looks like Q4 was 23% and Q1 was 21% in aggregate...still bad, but nowhere near as bad as the headlines read.

2. Lowered X2 prices wouldn't have helped at all...the vast majority of AMD's financial loss was in the low end/high volume section of the server sector (cheap 1P servers) where Woodcrest was very successful. The other problem was a lack of supply to the channel (non-OEM inventories were dry for months).

 

[rise]

thanks for the reply, Vid. you make some good points but i'm not sure about #2. i don't know as much as you probably, and i'm long a little intc (asp ~19) but there just seems to be alot of red flags about this deal, and its potential to be anything BUT brilliant, except for the investment bankers.

AMD expects to enter into capped call transactions which are intended to reduce the potential dilution to AMD's common stockholders upon any conversion of the notes. The capped call transactions are expected to have a strike price that matches the conversion price of the convertible notes at approximately three times the closing price of its common stock on the date the capped call transactions are executed.

Look at the USE OF PROCEEDS: AMD expects to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, AMD expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions. AMD expects to use at least $500 million of the remaining net proceeds of the offering to repay a portion of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies Inc. AMD expects to use any amounts not applied to the repayment of the term loan for general corporate purposes, including working capital and capital expenditures.

source.

again, i'm no expert investor (as if you could be confused ) and i think amd will be fine (provided k10 doesn't tank) so i like hearing other people opinions

also, GL with you investment :beer:

 

[Henny]

I think AMD will survive. There are two reasons:

1. Survival is in AMD's gene's. It's part of their culture.
2. Never underestimate Intel's arrogance and complacancy when things are going well for them.

What's different this time is the after effects of the ATI merger. This was a huge undertaking and 90%+ of the time merger's create much more complication then originally estimated. I think this is already proving to be the case for AMD. Time will tell but we'll see.

 

[Viditor]

Originally posted by: rise
thanks for the reply, Vid. you make some good points but i'm not sure about #2. i don't know as much as you probably, and i'm long a little intc (asp ~19) but there just seems to be alot of red flags about this deal, and its potential to be anything BUT brilliant, except for the investment bankers.

AMD expects to enter into capped call transactions which are intended to reduce the potential dilution to AMD's common stockholders upon any conversion of the notes. The capped call transactions are expected to have a strike price that matches the conversion price of the convertible notes at approximately three times the closing price of its common stock on the date the capped call transactions are executed.

Look at the USE OF PROCEEDS: AMD expects to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, AMD expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions. AMD expects to use at least $500 million of the remaining net proceeds of the offering to repay a portion of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies Inc. AMD expects to use any amounts not applied to the repayment of the term loan for general corporate purposes, including working capital and capital expenditures.

source.

again, i'm no expert investor (as if you could be confused ) and i think amd will be fine (provided k10 doesn't tank) so i like hearing other people opinions

also, GL with you investment :beer:

No worries Rise...

About the post you linked to...they have a number of their facts wrong (i.e. AMD didn't start the price war, the proceeds before the expenses they list is just over $2.2 Billion, the stock's high was $42+ which is the amount of the strike price, etc...).
What the capped calls do is basically hedge against the actual conversion of the bonds at a high share price. Their cost was ~$200 Million (~1% of the loan), and that's pretty cheap for an insurance policy of that magnitude...

In essence, AMD has converted all of their short term loans and costs into a slightly cheaper and more manageable long term debt while eliminating any possible cash crunch scenario for quite some time.
Ogg's point in the post was that shareholders are moved down on the list of creditors if the company goes bankrupt, but personally I don't see that happening at all (and obviously most investors don't either).

 

[Phynaz]

Originally posted by: Viditor

Originally posted by: rise
thanks for the reply, Vid. you make some good points but i'm not sure about #2. i don't know as much as you probably, and i'm long a little intc (asp ~19) but there just seems to be alot of red flags about this deal, and its potential to be anything BUT brilliant, except for the investment bankers.

AMD expects to enter into capped call transactions which are intended to reduce the potential dilution to AMD's common stockholders upon any conversion of the notes. The capped call transactions are expected to have a strike price that matches the conversion price of the convertible notes at approximately three times the closing price of its common stock on the date the capped call transactions are executed.

Look at the USE OF PROCEEDS: AMD expects to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, AMD expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions. AMD expects to use at least $500 million of the remaining net proceeds of the offering to repay a portion of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies Inc. AMD expects to use any amounts not applied to the repayment of the term loan for general corporate purposes, including working capital and capital expenditures.

source.

again, i'm no expert investor (as if you could be confused ) and i think amd will be fine (provided k10 doesn't tank) so i like hearing other people opinions

also, GL with you investment :beer:

No worries Rise...

About the post you linked to...they have a number of their facts wrong (i.e. AMD didn't start the price war, the proceeds before the expenses they list is just over $2.2 Billion, the stock's high was $42+ which is the amount of the strike price, etc...).
What the capped calls do is basically hedge against the actual conversion of the bonds at a high share price. Their cost was ~$200 Million (~1% of the loan), and that's pretty cheap for an insurance policy of that magnitude...

In essence, AMD has converted all of their short term loans and costs into a slightly cheaper and more manageable long term debt while eliminating any possible cash crunch scenario for quite some time.
Ogg's point in the post was that shareholders are moved down on the list of creditors if the company goes bankrupt, but personally I don't see that happening at all (and obviously most investors don't either).

The "insurance" as you put it was cheap becuase the chance of it being used are so very slim. Nobody expects AMD's stock price to get anywhere near the strike point.

As far as most investors seeing AMD going bankrupt, have you seen their stock price lately? Flirting with 52 week lows again, including the ATI assets. They're practically being sold for book value. Their short ratio is beyond the clouds. I'd say there are a very large number of investors who have a lot of money on the line betting that AMD's financial situation will continue to deteriorate.

 

[Viditor]

Originally posted by: Phynaz

Originally posted by: Viditor

The "insurance" as you put it was cheap becuase the chance of it being used are so very slim. Nobody expects AMD's stock price to get anywhere near the strike point.

As far as most investors seeing AMD going bankrupt, have you seen their stock price lately? Flirting with 52 week lows again, including the ATI assets. They're practically being sold for book value. Their short ratio is beyond the clouds. I'd say there are a very large number of investors who have a lot of money on the line betting that AMD's financial situation will continue to deteriorate.

Sigh...you obviously don't deal with derivatives very much (or investing in general).
For example, capped calls for Intel would be even cheaper. At the moment, 1/17/09 calls with a strike price of $40 on AMD are selling for $.15, while there is no interest at all for INTC anywhere above $35 calls...
As to the SIR (Short Interest Ratio), it's still WAY below where it was even 2 years ago (near 8 then)...and that's too bad from my viewpoint as a short is a guaranteed buyer of the stock (I love those short squeezes!).
Today's price has absolutely no bearing on the value of the financing...it's the stock movement and pricing during the announcement that is considered an indicator.
Today's price was on extremely light trading and is still almost 6% above their lows...in other words, it's irrelevant.

 

[Phynaz]

Nice try at the personal attack, trying to divert me from the facts?

Well, their price is declining again today, is that irrelevent also?

And BTW, their short ratio is above 8.

 

[Viditor]

Originally posted by: Phynaz
Nice try at the personal attack, trying to divert me from the facts?

Well, their price is declining again today, is that irrelevent also?

And BTW, their short ratio is above 8.

Sigh...you know, De Nile isn't just a river in Egypt.
Yahoo Finance
Short Interest Ratio is 2...

 

[Ruptga]

Is this kinda like 10 reasons why AMD's end will come in '10? I don't believe things like that for two reasons: the predictions are usually wrong (even from people/orgs more credible than The Inq.), and there's nothing I can do about what may or may not happen anyway.

 

[tatteredpotato]

I wait for K10 before I decide AMD's fate.