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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 217.91+0.9%Dec 5 9:30 AM EST
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To: niceguy767 who wrote (156666)4/17/2005 8:19:30 PM
From: Petz of 275872
 
I'm no accountant, but here's how I think it works.

Yes, both assets and liabilities w.r.t. Spansion will be removed from AMD's balance sheet and become part of Spansion's balance sheet. Instead, there will be a line entry for the net asset value of the minority share still owned by AMD. I would think that this line entry would be the correct fraction of the "after IPO" net asset value of Spansion after the offering.

I expect there will be a writedown taken before the transfer, but it will not be so large as to cause Spansion equity to be 0 before an IPO infusion of cash. That would make any IPO unsellable. In fact, I expect that the offering price of the shares in Spansion will be below book value per share.

I don't think the line entry for Spansion is "marked to market" depending on Spansion's stock price. It probably has to be changed only when AMD's ownership percentage changes.

Petz
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