Gary,
Are you thinking about investing in AMD, or just trying to learn some things about finance?
I see what you mean, that PP&E for AMD is increasing QoQ, but why only by 14 million, while cash drops by 40 million?
Correct, however what was AMD's Depreciation Expense for the Quarter? Think about PP&E, net this way...
PP&E, net(Q4) = PP&E, net(Q3) - Depreciation Expense + CapEx.
Typically, PP&E, net should decline....
But, some decent news is that AMD is sellin' uP and not building up an inventory. Additionally, Accounts Receivable (as I recall) stayed fairly constant. Those are positives. One doesn't like to see Accounts Receivables or Inventories spiking up while Revenues are flat....
Regarding your thoughts about AMD floating off Debt in the form of an offering, this of course is not cost-free. AMD has junk bond rating, if I recall correctly, so such an offering could only be done at a high rate of interest
Well, I never commented on the expense. One thing to consider is that Interest rates are at an all time low, therefore, it would be "cheaper" for AMD to re-issue debt now, than wait, say, 2 years when Interest rates might be higher.
I agree that Debt is not a bad thing, provides leverage, etc., but when it dwarfs available cash, and assets, this is how corporations and individuals go belly up.
What you want to do in order to receive a "rough" idea as to how AMD is doing financially...
EBIT/interest expense,
where EBIT is: Earnings before Interest and Taxes, or:
Revenues - Cost of Goods Sold - Operational Expenses (like R&D, SG&A, etc.)
Remember, the higher the ratio the better, and don't include interest income or "other income" |
