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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 214.990.0%Dec 26 9:30 AM EST
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To: Tenchusatsu who wrote (68812)1/24/2002 8:05:47 PM
From: Gopher BrokeRead Replies (1) of 275872
 
Firstly the issue has no effect on the outstanding shares unless AMD gains 40%, because noone would exercise below the strike price. And that 40% gain is measured after the "dilution". So the only way it can be considered "dilutive" is that it may take AMD a little longer to hit that 40% target.

Secondly, if $300M of convertibles expires this year at below strike then that counterbalances the new issue and the "dilution" becomes 2%-3%. Anyone know what conditions are attached to the maturing debt?

Thirdly, I can't see AMD doing worse with the money than 4.75% (plus a few percent to make up for the "dilution"). Strange that if this had been a share issue to buy a company that added a few pence to the bottom line (excluding all the one-time charges for writeoffs) it would have been regarded much more favoribly. I guess some AMD investors did not want to see AMD growing.

Bottom line, if you are a long-term, conservative investor then you should just be regarding this as AMD executing their business plan. If you are a shorter-term, aggressive investor then you should be asking why AMD aren't going for a billion so they can really clean up.
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